Goods and Services Tax (GST)
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Recently Finance Minister discussed the advantages of the Goods and Services Tax (GST) in India highlighting its focus on helping the stimulating economic activity. She credited the rise, in GST collections to a boost in engagement. Pointed out reductions in GST rates for essentials like hair oil, soaps, electrical appliances and movie tickets since its inception. It is noted a decrease in the weighted average GST rate from 14.4% in 2017 to 11.6% in 2019 due to ongoing tax rate adjustments. Also acknowledged the National Anti Authority’s role in ensuring that consumers benefit from tax savings.
The Goods and Services Tax (GST) is a type of sales tax indirectly imposed on goods and services. Companies incorporate the GST into the product price. Customers pay for the item inclusive of the tax. The portion collected as GST is then sent to the government. In India GST has replaced taxes, like excise duty, VAT and services tax. It is a tax system that applies at stages based on destination ensuring a unified taxation structure, across the country.
Moreover various essential goods and services have been exempted under the GST framework aiding sectors such as healthcare, education and agriculture. The minister praised the business processes and reduced compliance burden for MSMEs brought about by the tax system. The implementation of GST has facilitated integration of India’s markets by improving state trade and cutting logistics costs through initiatives like e invoicing and E way bills. Also highlighted that the consolidation of taxes and cesses, under GST was part of efforts led by Prime Minister to streamline taxation systems and drive economic progress.