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Wednesday, 4 January 2017

What is GST?

IDL Technologies
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Goods and Services Tax (India)

Goods and Services Tax (GST) is a proposed system of indirect taxation in India merging most of the existing taxes into single system of taxation. GST will be a game changing reform for the Indian economy by creating a common Indian market and reducing the cascading effect of tax on the cost of goods and services. It will impact the tax structure, tax incidence, tax computation, tax payment, compliance, credit utilization and reporting, leading to a complete overhaul of the current indirect tax system.
The taxes which will be subsumed into GST include central excise duty, services tax, additional customs duty, surcharges and state-level value added tax.Other levies which are currently applicable on inter-state transportation of goods are also likely to be done away with in GST regime.
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Benefits of GST 

GST has been envisaged as an efficient tax system, neutral in its application and distributionally attractive. The advantages of GST are:
  • Wider tax base, necessary for lowering tax rates and eliminating classification disputes
  • Elimination of multiplicity of taxes and their cascading effects
  • Rationalization of tax structure and simplification of compliance procedures
  • Harmonization of center and state tax administrations, which would reduce duplication and compliance costs
  • Automation of compliance procedures to reduce errors and increase efficiency
Taxes to be subsumed
GST would replace most indirect taxes currently in place such as:

Central Taxes                                                     

Central Excise Duty [including additional excise duties, excise duty under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955]
Service tax
Additional Customs Duty (CVD)
Special Additional Duty of Customs (SAD)
Central Sales Tax ( levied by the Centre and collected by the States)
Central surcharges and cesses ( relating to supply of goods and services)
State Taxes                                                        

Value-added tax
Octroi and Entry tax
Purchase tax
Luxury tax
Taxes on lottery, betting and gambling
State cesses and surcharges
Entertainment tax (other than the tax levied by the local bodies)
Central Sales tax ( levied by the Centre and collected by states)

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