🇮🇳 Need for Goods and Services Tax (GST)
🌟 Why was GST Needed?
🔸 After implementing VAT (Value Added Tax), the Government proposed GST.
🔸 Aim: One Nation, One Tax ➡️ Integrating State and Central taxes into one system!
🔸 Belief: A single national market = 🚀 Boost to Industry & Business!
🔸 Expert Opinion: GST could increase GDP by up to 2%!
🗓️ Passed: 29 March 2017
🚀 Came into Effect: 1 July 2017
🏛️ Introduction to Goods and Services Tax (GST)
The launch of GST was a BIG reform to simplify India’s indirect tax system.
🎯 Key Reasons for GST:
1️⃣ Simplification of Tax Structure
✅ Before GST ➡️ Many taxes like Excise, VAT, Service Tax = Confusion!
✅ After GST ➡️ One Tax System = Easier for businesses & consumers.
2️⃣ Elimination of Cascading Effect
❌ Old system = Tax on Tax!
✅ GST = Input Tax Credit ➡️ Pay tax only on value added at each stage!
Result: 📉 Lower prices for consumers.
3️⃣ Uniformity Across States
✅ Same Tax Rules across India.
✅ Goods can move freely 🛻 without extra state taxes = Single National Market!
4️⃣ Increased Compliance & Revenue
✅ Transparent system + Simpler procedures = 📈 More taxpayers, 📈 Higher government revenue!
5️⃣ Boosting Economic Growth
✅ Lower taxes ➡️ Lower prices ➡️ More consumption ➡️ Business Boom ➡️ More jobs!
6️⃣ Enhancing Export Competitiveness
✅ Indian products 🌍 become cheaper internationally ➡️ More Exports!
7️⃣ Transparency in Taxation
✅ Consumers can see how much tax they pay ➡️ More trust in the system. 🧾
🛠️ Suggestions in the First GST Proposal
When GST was first proposed, here were the main ideas:
🧩 1. Comprehensive Tax Structure
✅ Merge multiple indirect taxes like Excise Duty, VAT, Service Tax ➡️ into one GST!
🧩 2. Dual GST Model
✅ Taxes collected both by Centre and States:
- 🔹 Central GST (CGST)
- 🔹 State GST (SGST)
- 🔹 Integrated GST (IGST) for interstate transactions
🧩 3. Destination-Based Taxation
✅ Tax at the place of consumption, not production! 🎯
🧩 4. Input Tax Credit Mechanism
✅ Get credit for taxes paid on inputs ➡️ Avoid double taxation! 🎁
🧩 5. Establishment of GST Council
✅ Create a GST Council to:
- Set rates 📈
- Resolve disputes ⚖️
- Make rules 📜
🧩 6. Tax Rates Structure
✅ Multi-tier rates:
- 5%, 12%, 18%, 28%
✅ Some goods exempted! 🛒
✅ Special Cess on luxury goods like 🚗 Luxury cars, 🥤 Aerated drinks.
🧩 7. Special Provisions
✅ Items like alcohol & some petroleum products kept out of GST. 🚫
✅ Compensation to states for revenue loss for 5 years.
📜 Taxes Subsumed under GST
✅ GST combined many Central & State taxes into one!
🏛️ Central Taxes Subsumed
- Central Excise Duty
- Additional Excise Duty
- Service Tax
- Countervailing Duty (CVD)
- Special Additional Duty (SAD)
- Central Sales Tax (CST)
- Central Cesses and Surcharges
🏛️ State Taxes Subsumed
- VAT / Sales Tax
- Luxury Tax
- Entry Tax
- Entertainment Tax (excluding local levies)
- Octroi
- Purchase Tax
- Taxes on Lotteries, Betting, Gambling
- State Cesses and Surcharges
⚡ Taxes NOT Subsumed Under GST
🚫 Income Tax
🚫 Basic Customs Duty (on imports)
🚫 Excise Duty on Petrol, Diesel
🚫 Stamp Duty, Property Tax
🚀 Implementation of GST
🛠️ First Proposed: 2010-2011 (after Kelkar Committee report 2006)
🛠️ Delay: Centre-State disputes
🛠️ Breakthrough:
- 101st Amendment, 2016
- Creation of GST Council (September 2016)
- Launched on: 1 July 2017
🏷️ GST Rates in India
| 🛍️ Item | 🧾 GST Rate |
|---|---|
| Fresh Milk 🥛 | 0% |
| Rice (not packaged) 🍚 | 0% |
| Sugar 🍬 | 5% |
| Tea 🍵 | 5% |
| Packaged Ghee 🧈 | 12% |
| Computers 💻 | 18% |
| Mobile Phones 📱 | 18% |
| Air Conditioners ❄️ | 28% |
| Passenger Cars 🚗 | 28% |
| Caffeinated Beverages 🥤 | 28% |
| Business Class Tickets 🛫 | 12% |
| Life Saving Drugs 💉 | 5% |
| Toothpaste 🦷 | 18% |
| Footwear (< ₹500) 👟 | 5% |
| Idols of Wood/Stone 🪵🪨 | 12% |
📚 Important Highlights
🔵 Exemption Limit:
- ₹20 lakh for normal states
- ₹10 lakh for special category states
🔵 Composition Scheme:
- Up to ₹50 lakh turnover (Initially for goods only)
🔵 GST Compensation to States:
- Guaranteed for 5 years
- Based on 14% revenue growth from 2015-16 base year 📈
🔵 GST Bands:
- 5%, 12%, 18%, 28%, and Exempted
🔵 Special Cess:
- On luxury items like high-end cars 🚗, tobacco 🚬, and aerated drinks 🥤.
🎯 Conclusion
✅ GST has transformed India’s tax system, bringing simplicity, transparency, and growth!
✅ It continues to evolve 📈 — Stay updated on the latest GST rates and rules!
GST Study material PDF free download
1.GST Study Material Pdf Ncert notes (Government Budget and the Economy)
2.GST Study Material Pdf Ncert notes (Liberalisation, Privatisation, Globalisation : An Appraisal)