five-years-stronger

Why in the news?

July 1, 2022, marked the completion of 5 years since the GST (Goods and Services Tax) was implemented in India.

About GST

  • GST is known as the Goods and Services Tax. It is an indirect tax which has replaced many indirect taxes in India such as excise duty, VAT, services tax, etc.
  • The Goods and Service Tax Act was passed in Parliament on 29th March 2017 and came into effect on 1st July 2017.
  • Goods and Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.
  • GST is a single domestic indirect tax law for the entire country.
  • Four types of GST:
    • The Central Goods and Services Tax (CGST)
    • The State Goods and Services Tax (SGST)
    • The Union Territory Goods and Services Tax (UTGST)
    • The Integrated Goods and Services Tax (IGST)

Why GST?

  • Creation of Unified common market:
    • helped in the creation of a consolidated common national market for India.
    • Boosted foreign investment and “Make in India” campaign.
  • Streamline Taxation: Through congruity of laws, procedures and rates of tax between Centre and States and across States.
  • Replacement of multiple Taxes: sales tax, service tax, etc., which made India more of an integrated national market and brought more people into the taxation net.
  • To improve efficiency: it can add substantially to finances as well as the growth of the country.

GST Council:

  • As per Article 279A (1) of the amended Constitution, the GST Council has to be constituted by the President within 60 days of the commencement of Article 279A.
  • The notification for bringing into force Article 279A with effect from 12th September 2016 was issued on 10th September 2016.
  • As per Article 279A of the amended Constitution, the GST Council which will be a joint forum of the Centre and the States shall consist of the following members: -
    • Union Finance Minister - Chairperson
    • The Union Minister of State, in charge of Revenue of finance
    •  The Minister In-charge of finance or taxation or any other Minister nominated by each State Government
  • The GST Council has played a significant role in forging a national consensus on key issues related to the tax regime- rates, exemptions, business process and movement of ITC etc.

Graph of GST: Significant Facts

  • GST has eliminated the tax arbitrage that existed among Indian states under the CST/VAT regime.
  • 63.9 lakh taxpayers migrated into the GST in July 2017.
  • 41.53 lakh taxpayers and 67000 transporters are enrolled in the E-way portal generating 7.81 crore e-way bills per month
  • Total of 292 crore e-way bills have been generated out of which 42% are for inter-state transport of goods.
  • 31 May, witnessed the highest single-day generation of 31,56,013 e-way bills.
  • This year, initially, records an average collection of 1.55 lakh crore.
  • GST acted as an intrusive control system by saving vast time and fuel at the check posts in physical verification of heavily loaded trucks.

GST- A Vision

  • Special attention to Msme's needs and requirements in the growth aspect.
    • Tax and compliance burden to be low.
    • To remain integrated with the supply chains for ITC purposes
  • The administrative services of GST are fully automated and technically developed.
  • Formation of GSTN professionally managed tech company to run the platform.
  • Constant up-gradation of hardware and software keeps the system nimble.

Conclusion

  • India witnessed the growth of the domestic integrated market.
  • GST undoubtedly has removed multiple taxes on goods and services.
  • Centre and state have both accepted a single tax which has partially enhanced cooperative federalism
  • GST gave additional powers to states in terms of service tax.
  • The implementation of GST never compromised the authority of the legislature.
  •  Former Finance minister Arun Jaitley quoted,” GST proved to be both consumer and the assessee friendly.