GST Its Effect And Impact: 3 Years of Implementation, Was It Worth The Hype?

The motion to introduce GST was passed in Parliament on 29 March 2017. he tax came into effect on 1st July 2017.

GST is a consumption tax based on destinations, which is imposed on different stages of the production and distribution of goods and services. This is a complex, multi-stage, destination-based tax, which is levied on every added value. The Customer pays GST. The sellers complement their goods with GST. The buyer pays the initial purchase price, plus the GST when paying the sales tax. The portion of GST is then paid to the Government. This is recognized in some countries as the e-Added Tax ( VAT ).

The key goal of introducing GST into the Indian tax system was to abolish the or double taxation, on revenue. The tax is imposed on every selling point. In the case of central-GST and state-GST transactions within the state are compensated.

A single common goods and services tax was introduced and given a green light for growth during a meeting between Prime Minister Atal Bihari Vajpayee and his Economic Advisory Panel. The panel that introduced the tax consisted of three former IG Patel, Bimal Jalan, and C Rangarajan, governors of RBI. A committee headed by West Bengal's finance minister, Asim Dasgupta, was subsequently set up to develop a GST model.

Vajpayee later formed a task force headed by Vijay Kelkar in 2002, who recommended that GST be implemented by the 12th finance commission.

The new finance minister P after the 2004 Lok Sabha election, which ended the rule of the Vajpayee government and elected Congress-led UPA. Chidambaram had started to work on GST. They suggested incorporating GST into the Indian tax system by 1 April 2010.

After the 2011 West Bengal elections, which threw the CPI (M) out of control, Asim Dasgupta resigned as head of the GST committee by reflecting on 80 percent of the work completed.

On 22 March 2011, UPA implemented GST in the 115th Constitutional Amendment which ran into different objections from the opposing parties.

The tax was eventually accepted and implemented in 2017 after many delays, lengthy postponements, protests, and change of government. The announcement was underlined by the Parliament's historic midnight session in both houses. Several businessmen have participated as a guest at the event. The opposition party, Indian National Congress, boycotted the launch program. This is one of the few midnight sessions Parliament was having. Several other notable sessions are India's declaration of independence in 1947 and the celebration of the silver and golden jubilee.

GST-Benefits

Double tax or sale-on-tax drop.

Benefits for startups and SMEs.

Reducing the overall product cost to make it more competitive in the global marketplace.

Increase in enrollment for taxpayers.

G   ST-components

CGST: the tax collected by the central government during an intrastate selling of a drug.

SGST: the tax paid on an intrastate sale by the State Government.

IGST: a tax levied by the Central Government on foreign transactions.

State sale – CGST+SGST (Central and State distribute the revenue equally among themselves.

Sale to another state – IGST (the only center will be paid, and then the center will share the IGST revenue based on the goods' destination)

Example: A West Bengal dealer sells an Rs. 50,000 worth of material to a Bihar customer. The transaction would have an IGST limit of 18 percent (Rs. 9000). This Rs. 9000 is payable to the central government.

Should the same dealer sell his products from his state to a customer, the GST rate will be 12 percent (Rs. 6000). Of the 12 percent GST, SGST guns will be priced at 6 percent (Rs. 3000). The Rs. 3000 will go to the government of West Bengal, as the sale takes place inside the state's frontier.

Since GST was launched, the goods had been subject to a number of indirect taxes. The states raised the Added Tax (VAT). That state had its own rules and regulations which made the transactions more difficult. GST brought all of the taxes under the same common umbrella making the device easier.

During the interstate selling of goods, ST (Center State Tax) was levied before GST. Indirect taxes such as entertainment tax, loans, and local taxes were all levied collectively by the government of the state and the union. That often resulted in double taxation of a single material.

Why GST has helped to lower prices:

GST cuts a product's price by eliminating the tax cascading effect. If we look back, however, the Value Added Tax was implemented in the Indian tax structure in 2005 to address the same problem. The ia sector is rising. GST's on-line service makes it easier for freelancers to file taxes.

The real estate industry helps in job creation and is one of Indian market's most economical markets. This tax rule would add clarity and accountability to the much needed market. Complete avoidance of the law's effect has yet to be seen.

GST difference with VAT difference

The cascading impact on state indirect taxes was removed by VAT, thus leaving other indirect taxes unchanged. Whereas GST permits a smooth tax credit flow that in turn removes the cascading impact of all indirect taxes. To better understand this you need to follow an example to know how the tax-on-tax impact of the previous tax structure was created:

Let C be a manufacturer of automobiles that existed in both the pre and post GST period.

C sold the cars to West Bengal car dealers. The transaction taxes levied are:

1) The federal government has placed uniform excise duties on the production of automobile

2) The VAT / CST is levied by the state government

3) The State Government also levied grants on goods entering the State.

The manufacturer sells to the distributor:

Car Cost: 500000 rs. 10 per cent excise duty: Rs. 50,000  12 per cent VAT: 66,000 rs  The dealer has to pay the supplier for the car: 6.16,000 rs.

Note: The dealer had already paid the supplier the VAT and excise tax. The producer sent the federal excise duty to the central government, and the VAT was paid to the state government.

Dealer markets cars to end consumers:

Auto dealer cost = Rs. 5,50,000 (Car cost + Excise duty)  Dealer's 10 per cent margin = Rs. 55,000  12% VAT = 72,000 rs [5,50,000 + 55,000] * 12%  Credit = Rs 6,77,600  Age Post-GST:

Impact GST has:

GST has helped to improve Indian manufacturing sector morale and efficiency. India has faced a significant rising export problem for decades. Administrative expenses have risen, due to various indirect taxes. GST's implementation has eased the pressure and is helping the sector to grow better. Because of GST, undertakings that were not previously under the tax bracket now fall under the tax system that requires less tax evasion.

Analysis of impact of GST in various sectors:

The logistics sector forms the country's backbone. A well-organized and mature logistics sector will be of assistance in moving India forward. Make in India can also take the plunge into where the government wanted it to be.

During the last few years, e-commerce has become a rising field in India. While most e-commerce firms are not satisfied with the Tax Collection at Source (TCS) law that GST brings with it, GST has the potential to have a good effect on the sector. The new TCS is at 1 percent and there is yet to be seen the long-term impact in this particular field.

The tax has provided several beneficial ways for the pharmaceutical industry. This provided a level playing field for all drug manufacturers and simplified the tax structure. The only problem still lies in drug pricing. The pharmaceutical firms are preparing for a tax crisis that will help them build reliable facilities for health care.

The telecommunications industry will see a lot of benefit from the tax implementation. The handset manufacturers find it simpler to sell the devices at lower rates as no state-specific tax structure needs to be set up now being "one tax one country." They'll also benefit from reduced logistics costs.

A large proportion of qualified and unskilled employees are finding employment in the textile industry. 10 percent of all exported products come from the textile industry. With the support of GST, he is expected to increase in the coming years.

The agricultural sector contributes most (around 16 percent) to GDP in India. The sector is mainly influenced by the state borderline transport costs of the goods. The GST will work this out. also benefits the FMCG industry by reducing logistics and delivery costs, and by removing the need for multiple sales depots.

Many automotive industries benefitted most from GST implementation. Previously the consumer had to pay a significant range of taxes, such as excise tax, VAT, sales tax, road tax, motor ve