Goods and Services Tax (GST) What is Goods and Services Tax? Introduced through the 101st Constitution Amendment Act, 2016. one of the bigg...
Goods and Services Tax (GST)
What is Goods and Services Tax?
- Introduced through the 101st Constitution Amendment Act, 2016.
- one of the biggest indirect tax reforms in the country
- introduced with the slogan of ‘One Nation One Tax’.
- It is a consumption tax
- The GST avoids the cascading effect or tax on tax - which increases the tax burden on the end consumer.
- Indirect taxes such as excise duty, VAT, service tax, and luxury tax have all been absorbed by GST.
GST tax structure:
- Central GST covers excise duty, service tax, etc
- State GST covers VAT, luxury tax,etc.
- Inter-state trade will be covered by the Integrated GST (IGST).
Record GST revenues:
- April 2022, the first month of the new financial year has witnessed record Goods and Services Tax (GST) collections of around ₹1.67 lakh crore. This is the highest monthly collection in the five years since the introduction of the GST.
Significance:
- Reduced fiscal pressure - More revenue to the Central and State Governments
- Fund compensation payments due to states:
- Issue of compensation payments will become easier if GST collections remain at these levels.
- Aid in the payment of outstanding compensation dues to states (approximately 78,700 crore)
- The increased tax revenue, combined with improved compliance, would provide the GST Council with a much-needed opportunity to consider GST rate slab rationalisation.
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