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July 24, 2018

Model Essays for SBI PO Main Exam 2018 : GST (Goods & Services Tax) & It's Benefits

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Essay : Goods & Services Tax (GST) & It's Benefits

GST is the largest indirect tax reform of India which came into force on the midnight of 1st July, 2017. It is a consumption based tax levied on sale, manufacture and consumption of goods & services at a national level. GST has substituted for all indirect tax levied by State and Central Government. Some of the indirect taxes were Central Excise Duty, Additional Excises Duty, Excise Duty levied under the Medicinal Preparations (Excise Duties) Act, 1955, Service Tax, Additional Customs Duty (CVD), Special Additional Duty of Customs, Central Surcharge and Cess, Luxury Tax, Taxes on Lottery, Betting and Gambling, VAT/ Sales Tax, Octroi and Entry Tax, Entertainment Tax, State Cess and Charges.


The Kelkar Task Force on indirect tax had suggested a comprehensive Goods and Services Tax (GST) based on VAT principle in the year 2003. 

Components of GST 

There are two components of GST namely- Central GST (CGST) and State GST (SGST). Both of these would be levied by the centre and state simultaneously across the value chain. Integrated Goods and Service Tax (IGST) shall be levied on Inter-State transactions of goods and services which are based on destination principle. GST has four broad tax categories of 5, 12, 18 and 28 %. Goods and services above 28 % fall in the luxury segment.

GST Council

It is a joint forum of centre and state. It is the authority for taking all the major decisions related to GST. It consist of the following members 
  • Union Finance Minister who will be the 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 Secretary (Revenue) is the Ex-officio Secretary to the GST Council. 

Benefits of GST 

For Business and Industry Ease of Compliance 
  • The complete GST regime is backed by a robust IT system. 
  • This would make it easier for the tax payer to handle the complete process online. This would promote transparency.
  • Uniform tax rate and structure : With the GST Council deciding the tax rate, it would be uniform throughout the country. 
  • No hidden effect: Under this regime, there is minimal cascading of taxes. This does away with the hidden business costs.
For Central and State Government 
  • This will decrease the overall collection cost of collection of tax revenue for the government leading to higher revenue efficiency. 
  • It will be easy to administer a single tax in comparison to the multiple number of indirect taxes. 
For Consumer
  • Under GST, there would be only one tax from the manufacturer to the consumer, leading to transparency of taxes paid to the final consumer. 
  • GST will eliminate the double taxation on the goods. The customer would have to pay a single tax in the value chain. 

Difficult Words with Meanings :
  • Reform - a change that is intended to correct a situation that is wrong or unfair, or make a system work more effectively
  • Consumption - the process of buying or using goods
  • Levy - impose tax or fine
  • Substitute - to use something new or different instead of what is normally used
  • Excise - a tax that a government charges on services used and goods sold inside its country
  • Customs - the taxes that you pay on goods that you bring into a country
  • Surcharge - an additional amount of money that you must pay for something over the usual price
  • Cess - a tax
  • Octroi - a duty levied in some countries on various goods entering a town or city
  • Comprehensive - including many details or aspects of something 

shared by Nisheeta Mirchandani
 
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