All the different types of indirect taxes and implement a “single
taxation” system. This system is called as GST (Goods & Services Tax). The main expectation
from this system is to abolish all indirect taxes and only GST would be levied.
As the name suggests, the GST will be levied both on Goods and Services.
GST was first introduced during 2007-08 budget session. On 17th December 2014, the current Union
Cabinet ministry approved the proposal for introduction GST Constitutional
Amendment Bill. On 19th of
December 2014, the bill was presented on GST in Loksabha.
France was the first country to introduce this
system in 1954. Nearly 140 countries are following this tax system. GST could
be the next biggest tax reform in India. This reform could be a continuing
process until it is fully evolved.
A four-tier GST tax slabs have been decided by the Finance ministry.
Below are the details;
- Zero Tax rate : There won’t be any tax on almost 50 % of items
in the Consumer Price Index basket, including grains used by the common
man.
- 5% Tax slab : This is applicable on items of mass consumption used
by common people.
- There
would be two standard rates of 12% and 18% under the GST regime.
- All
the items (especially luxury items) which are now taxed at around 30% will fall under
28% GST rate slab.
- An
additional cess would also be levied on luxury cars, tobacco products
& aerated drinks besides the highest tax rate (28%).
- The
tax rate proposal will now be placed in Parliament for its approval.