India’s biggest indirect tax reform in the form of Goods and Services Tax (GST) celebrates its second year anniversary on July 1 this year. GST came into effect on the July 1, 2017 in a ceremony held in the parliament. This indirect tax regime transformed India into one nation, one tax and replaced 17 taxes and cesses with just five tax rate slabs, beginning from 0 to 28 percent. It absorbed many indirect taxes imposed by the Central and state governments such as excise, VAT, and service tax. On its completion of two years, let us go down the memory lane and look at the genesis and two-year journey of GST.
Customers bear the GST tax when they buy goods or services, such as food, clothes, items of daily needs and transportation.
GST is an indirect tax which is not directly paid by the customers to the government. It is levied on the manufacturer and the providers of services.
The sellers add the tax expenses into their costs, and the price the customers pay is inclusive of Goods and Services Tax.
Goods and Services Tax replaced several taxes and levies including the central excise duty, services tax, additional customs duty, surcharges, state-level value added tax and Octro.
The development of this tax reform underwent many consultations and revisions before it was finally launched in 2017.
The launch was marked by a historic midnight June 30 to July 1 session of both the houses of parliament.
During the introduction of the GST, there was a lot of panic, confusion and criticism among the people in the country.
People from all walks of life be it financial experts or common men were skeptical if GST would work.
The GST Council met 35 times until now to consider the difficulties of taxpayers.
The GST Council makes important decisions on issues such as reducing compliance burden for taxpayers, providing sector specific relief measures, etc.
Goods and Services Tax rates have been modified many times, after its launch, the latest on December 22, 2018.
A panel of federal and state finance ministers decided to revise GST rates on 28 goods and 53 services.
Goods and Services Tax collection in March 2019 rose to 15.6 percent from a year ago to Rs 1.06 lakh crore, which is the highest since the new indirect tax system took effect.
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