The Goods and Services Tax (GST) is levied when a consumer buys a product or service either from offline or online retailers. Currently, the tax structure in India is crippled with several direct and indirect taxes.
With the introduction of GST, all the taxes will be merged into a single comprehensive tax system and will bring them into a single umbrella.
The main aim of the GST bill is to avoid the alarming effect of taxes on overall production and distribution prices on goods and services.
Current Indian Tax System
The present tax system is structured in such a way that different charges are levied by state and central governments separately.
The taxes mainly levied by the centre comprises of income tax, service tax, central sales tax, excise duty including security transaction tax. However, the respective state governments charge VAT, sales tax, octroi, state excise, property tax, entry tax, and agriculture tax.
You should note that all state government doesn’t charge taxes such as octroi and entry tax. With the passing of GST, customers need only have to pay GST from the sale of origin as the main source.
If you are purchasing from online, the company from where you purchase goods should pay the required GST directly to the relevant tax authorities. You need not have to pay any cash at the time of its receipt.
The current tax system involving several taxes has put a huge burden on Indian products.
It not only affects the price but also the sale in the international market. The GST aims to substantially help in boosting exports.
The GST will also bring in transparency and corruption-free tax administration.
The introduction of GST will be beneficial for online traders since they can deliver goods to all parts of India without worrying about different tax structures.
Challenges
Even though the law to be enacted is called GST, there will be two separate laws like CGST (for center) and SGST (states).
To implement GST without any trouble, the respective states should work together by reaching a consensus with all political parties.
The main factor in the implementation of GST is that both states and the centre should come into a consensus on uniform GST rates and inter-state transaction regulations of goods and services.
Moreover, the administration should be efficient. The IT infrastructure should be put in place and tested before the implementation of the new tax reform.
Let’s hope for a better future with GST.
