The secret of change is to focus all your energy, not on fighting the old, but on building the new. Likewise, in past few years, there had been a lot of changes made in the Indian Economy. But we also need to change the way we look at our economy. There are a lot of things we don’t measure well.
On 1st July 2017, GST came in to the picture in the Indian Economy under Prime Minister Narendra Modi’s Government. GST is defined as Goods and Service Tax, which was a replacement to existing indirect taxes like excise duty, Service Tax, VAT, etc. It will be levied all over India on the supply of goods and services. In this guide we will be examining its impact on various sectors across the country.
On 1st July 2017 at midnight, the President of India, Sir Pranab Mukherjee and Prime Minister Sir Narendra Modi launched GST all over India including Jammu & Kashmir. However, there have been many changes made to the rates of GST, the latest being on 18th January 2018.
In a short span of time, all the states approved their State GST (SGST) laws. Union territories with legislatures, i.e., Delhi and Puducherry, have adopted the SGST Act and the other 5 union territories without legislatures have adopted the UTGST Act.
The idea of introducing GST was first proposed by the then Union Finance Minister, P. Chidambaram in his Budget for 2006-07. The discussion on GST took specific decision with the introduction of the Constitutional Bill (122nd Amendment), 2014. The Bill was passed by the Parliament on 8 August 2016. This was followed by the approval of the Bill by more than 15 states. On 12 April 2017, the Central Government enacted four GST bills:
In the Indian economy, the service sector contributes to over 55%. Separate taxation of goods and services is neither viable nor desirable. GST in India had been introduced to reduce the tax burden that’s on both companies and consumers. In the previous system, there were multiple taxes added at each stage of the supply chain, without taking credit for taxes paid at previous stages. As a result, the end cost of the product does not clearly show the actual cost of the product and how much tax was applied. The tax structure was complex. GST integrated most of the taxes into one single tax, where the consumers are benefited. This method provides Input Tax credit paid on the purchase of goods and services, which can be offset with the tax to be paid on the supply of goods and services. As a result, this reduces the overall cost, with the end customer paying less.
GST is a game-changing reform for the Indian Economy, as it will bring the net appropriate price of the goods and services. The various factors that have impacted Indian economy are:
Before the implementation of GST, consumers paid more for goods and services, however, everyday consumables saw no major change in rates. The main drawback is on the small and medium enterprises, who will incur costs in trying to become GST compliant, which may result in higher prices of goods.
GST impact can be either good or bad. Fortunately it’s has been good till now and is expected to have a positive impact in the long term. For your queries relating to the issuance of challans and all other GST related queries including registration, compliance and reconciliation, enlist the aid of the experts at earlyGST by H&R Block. India.