Need for GST in India

When we talked about GST we need to talk what are the Need for GST in India. Why GST is important. If talk about earlier indirect tax structure Government charge indirect taxes which basically divided into two parts i. e. Central tax and State tax which are further divided into 17 sub part and the rate of tax are also differ from state to state which create lot of complication to our tax structure. This is the backbone reason for the need of GST in India and the initiative to introduce GST by government which comprehensively tax structure covered both goods and service which will make easier to provide goods and service across the country.



Now we pointed out here some of the drawback in earlier indirect tax system in India. TheVdrawback under the earlier indirect tax structure which are pointed out here are not mutually exclusive some of the shortcoming under earlier indirect taxation system are pointed out here.

(A) Different laws for different tax

(B) No CENVAT credit of Krishi Kalyan cess to manufacturer 

(C) No credit to CST 

(D) No credit to swachh Bharat cess to manufacturer and service provider 

(E) Non availability of credit to excise duty and service tax for VAT 

(F) No credit to bed to service provider



Different laws for different tax

In the earlier indirect tax system there are 17 different type of taxes which are merged into GST all these 17 indirect taxes are governed by different laws such as Central Sale Tax Act 1956. Value added tax Act act 1994. Service tax, Central Excise Act 1944 and much more. 


No CENVAT credit of Krishi Kalyan cess to manufacturer

Pursuing with an objective to finance, and to promote agriculture and farmer welfare KCC @ 0.5% was levied on the value of all taxable service w. e. f. 01/06/2016. Whilst the credit of KCC was allowed to service provider it was eventually denied to manufacturer, who had a liability to Central Excise, but did not provided any taxable output service.

No credit to CST

In the absence of credit of CST which was levied on inter state sale collected by the origin state added to the cost of product.

No credit to swachh Bharat cess to manufacturer and service provider

Swachh Bharat Cess @ 0.5% on value of all taxable service was applicable on from 15/11/2015. However, no CANVAT credit was allowed to swachh Bharat cess to the manufacturers as well as service providers. Further swachh Bharat Cess SBC cannot be paid by utilising the credit of any other text.

Non availability of credit to excise duty and service tax for VAT

VAT dealers were not able to take credit of excise duty charged by manufacturers. Duties paid under excise law was subsumed into cost beyond the manufacturing level. Like excise duty, VAT dealer were not able to take credit of service tax charged by the service providers on various input services.

No credit to VAT service provider


Service providers were not allowed to claim any credit for VAT paid on their inputs.


Now after discussing the an disadvantage and fault in earlier indirect tax system we will discussed what is the advantage and good things about new year and direct tax structure that is called GST

FIRST: First of all government give slogan of "one country one tax". In the earlier indirect tax structure different states were charged different rate of tax for same product. But under GST all the goods and service are charged at the same rate in all over the country.

SECOND: Credit of CST and all other indirect taxes is not allowed in the previous indirect tax structure where under GST the entire concept of CST has been removed with introduction of IGST.

THIRD: Before GST different tax barrier such as check post and toll plazas lead to waste of time and fuel this causes to increase the cost of product but after GST all the barriers and plazas are removed and goods can be removed from one state to another without any interference.

FOURTH: In the earlier tax system lot of complicated tax compliances are required. Also the taxpayer faces the problem of different-different tax laws and Act. With GST the tax compliances become much easier and user-friendly for the taxpayer this will lead to more GST registration and more of income for the government.


Need for GST in India Need for GST in India Reviewed by Unknown on August 26, 2018 Rating: 5

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