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Goods and Service Tax

Updated: Feb 8, 2023

GST is referred as Goods and Services Tax. It is an indirect tax that was implemented to replace a variety of previous indirect taxes, including the value-added tax, service tax, purchase tax, excise duty, and others. GST is a tax that India imposes on the supply of specific products and services. There is only one tax that is imposed in India.

History of GST

GST is economic integration of India just like what Sardar Vallabhbhai Patel had done decades back to integrate the country..”

On July 1st 2017, the Goods and Services Tax implemented in India. But, the process of implementing the new tax regime commenced a long time ago. In 2000, Atal Bihari Vajpayee, then Prime Minister of India, set up a committee to draft the GST law. In 2004, a task force concluded that the new tax structure should put in place to enhance the tax regime at the time.

In 2006, Finance Minister proposed the introduction of GST from 1st April 2010 and in 2011 the Constitution Amendment Bill passed to enable the introduction of the GST law. In 2012, the Standing Committee started discussions about GST, and tabled its report on GST a year later. In 2014, the new Finance Minister at the time, Arun Jaitley, reintroduced the GST bill in Parliament and passed the bill in Lok Sabha in 2015. Yet, the implementation of the law delayed as it was not passed in Rajya Sabha.

GST went live in 2016, and the amended model GST law passed in both the house. The President of India also gave assent. In 2017 the passing of 4 supplementary GST Bills in Lok Sabha as well as the approval of the same by the Cabinet. Rajya Sabha then passed 4 supplementary GST Bills and the new tax regime implemented on 1st July 2017

Tax Laws Before the Implementation of GST

  • The Centre and the State used to collect tax separately. Depending on the state, the tax regimes were different.

  • Even though import tax was levied on one individual, the burden was levied on another individual. In the cases of direct tax, the taxpayer must pay the tax.

  • Prior to the introduction of GST, direct and indirect taxes were present in India.

Who Should Register for GST?

The below mentioned entities and individuals must register for Goods And Services Tax:

  • E-commerce aggregators

  • Individuals who supply through e-commerce aggregators

  • Individuals who pay tax as per the reverse change mechanism

  • Agents of input service distributors and suppliers

  • Non-Resident individuals who pay tax

  • Businesses that have a turnover that is more than the threshold limit

  • Individuals who have registered before the GST law was introduced

Registration of GST

GST is a tribute to the maturity and wisdom of India’s democracy..”

Any company that is eligible under GST must register itself in the GST portal created by the Government of India. The registered entities will get a unique registration number called GSTIN.

It is mandatory for all Service providers, buyers, and sellers to register. A business that makes a total income of Rs.20 lakhs and more in a financial year must be required to do GST registration. It takes 2-6 working days to process.

Advantages of GST

The following are the advantages of goods and services tax in India

  1. Regulation of the unorganized sector

  2. E-commerce operators no longer suffer from differential treatment

  3. Fewer complications

  4. Composition scheme

  5. Registration process and filing of returns are simple

  6. Higher threshold

  7. Elimination of the cascading tax effect

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