GST rate

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GST tax rate
The Goods and Services Tax bill, touted to be
India's biggest tax reform, will simplify the
current system of taxation. The bill will convert
the country into a unified market by replacing
all indirect taxes with one tax. The current tax
regime is riddled with indirect taxes which the
GST aims to subsume with a single comprehensive
tax, bringing it all under a single umbrella. The
bill aims to eliminate the cascading effect of
taxes on production and distribution prices on
goods and services.
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Goods and Services tax
It has been long pending issue to streamline all
the different types of indirect taxes and
implement a single taxation system. This system
is called as GST ( GST is the abbreviated form of
Goods Services Tax). The main expectation from
this system is to abolish all indirect taxes and
only GST would be levied. As the name suggests,
the GST tax will be levied both on Goods and
Services.
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What is the cascading effect of taxation?
Cascading effect of taxes is caused due to levy
of different charges by state and union
governments separately. In the current
multi-staged tax-structure, the following taxes
are levied by the centre and state
separately Taxes levied by the Centre include
Income tax, service tax, central sales tax,
excise duty and security transaction tax.
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Service Tax
Service tax is a tax levied by the government on
service providers on certain service
transactions, but is actually borne by the
customers.
When we use any service be it a phone bill
payment or Hire a room in a hotel we have to pay
out little more than the actual rates charged.
Ever wondered why? The reason is very meek, we
are made to pay service tax over and above the
usual charge but the bigger question is What is
Service Tax. So Service Tax is a tax which is
payable on services provided by the service
provider. Just like Excise duty is payable on
goods which are manufactured, similarly Service
Tax is payable on Services provided.
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Implications of GST
GST will have a far-reaching impact on almost all
the aspects of the business operations in the
country, for instance, pricing of products and
services, supply chain optimization, IT,
accounting, and tax compliance systems . With GST
rate, it is anticipated that the tax base will be
comprehensive, as virtually all goods and
services will be taxable, with minimum
exemptions. This tax structure raises the
tax-burden on Indian products, affecting their
prices, and as a result, sales in the
international market. The new tax regime will
therefore, help boost exports.
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How Will GST Work?

• In India, GST would work on dual model which will
  include C-GST collected by Central Government
  S-GST collected by State Government on
  intra-state sales. GST registration reform would
  also feature an Integrated GST (IGST) collected
  by Central government on inter-state sales, which
  is to-be divided between Central and States
  Government in a manner decided by the Parliament
  on recommendations by GST Council.
• By doing away with several Central and State
  Taxes, GST would diminish the cascading effect of
  tax (or double taxation, whereby the same product
  is taxed at the stage of manufacturing as excise,
  then as VAT/ sales tax on sale and so on..) which
  is prevalent in the current tax framework. Being
  a consumption-destination-based tax, GST tax rate
  would be levied and collected at each stage of
  sale or purchase of goods or services based on
  the existing input tax credit method. Current tax
  structure works on production-origin-based system
  i.e. goods and services are taxed differently on
  each stage of production.

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Challenges for implementing Goods and Services
Tax system

• The bill is yet to be tabled and passed in the
  Parliament
• To implement the bill (if cleared by the
  Parliament) there has to be lot changes at
  administration level, Information Technology
  integration has to happen, sound IT
  infrastructure is needed, the state governments
  has to be compensated for the loss of revenues
  (if any) and many more..
• GST, being a consumption-based tax, states with
  higher consumption of goods and services will
  have better revenues. So, the co-operation from
  state governments would be one of the key factors
  for the successful implications of gst

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