What is GST ?


GST is a common word heard in the medias. What is GST? Why is it getting delayed? The state governments of India are very reluctant to support GST, even though a historic reform in the Indian tax system. It is highly debated in the country. GST will be an alternative for the multiplicity in the current tax system.  The state governments fear that, it will reduce their tax powers. It is not clear that, GST is beneficial for state governments. The central government is not doing anything to give clarity in this matter. Currently central sales tax is imposed and collected by central government. The central sales tax has been reduced to 2% in the last few years.

The central government’s plan was to implemtn the plan from April 2011. The deadline was then changed to 2012. Anyway, the union budget 2012 was very reluctant to give comments on the matter. The central government is very reluctant to give any assurance on state government’s loss in the matter. GST will not be implemented before the general elections in 2014. No chance is seen on the implementation before that.

GST will definitely make the national economy strong. GST is a comprehensive tax which levies tax at manufacture, sale and consumption of goods and services. This tax is collected on the value added goods and services on each stage of the supply chain. According to experts, GST will improve the tax collections in the country. Under GST, the tax burden is divided equally from manufacturing and services. It is helpful for the corruption free and transparent tax administration.  GST will be levied at the destination point. In the current tax laws, tax will be levied, when the manufacturer moves his product from his factory and in the retail outlets. In the GST system, both central and state taxes will be levied at the time of sale. It will be charged on the manufacturing cost. India can gain $15 Billion by this so that it will promote exports, raise employment and boost growth.  According to the central finance ministry, government is not ready to give further CST compensation to the state governments. Central government has already given Rs 19000 Cr to states during 2010-11. In the budget 2012-13, central government given a provision of Rs 300 Cr only.  Sushil Modi, Chairman of empowered committee, said that central government was ignoring state governments on the matter.

One Response to What is GST ?

  1. krunal says:

    I am purchasing chemical from one firm and buy to another firm ,does cst and gst charges are applicable to my transactions?

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