Goods and Service Tax (GST) is considered the major step in indirect tax reforms in the last six decades or more. GST will be a single indirect tax levied on goods and services in lieu various central and state taxes, like Central Excise, Service Tax, VAT, Entertainment Tax, Luxury Tax, etc. GST will be applicable to all manufacturers, traders and service providers when their minimum turnover crosses Rs 20.00 Lakhs per annum.
Benefits of GST
Eliminates Cascading Effect
The major contribution of GST is an elimination of the cascading effect of multiple taxations as it subsumes different indirect taxes – Central Excise Duty, Service Tax, VAT, Central Sales Tax, Customs Duty, Central Surcharge & Cess, Octroi, Luxury Tax, Entertainment Tax, etc. This results in reduced tax burden to the consumers.
Widens Tax Base
It is expected that with the introduction of GST the tax base will increase. This may result in reduced tax liability in due course of time. A reduced tax with single point taxation will make the Indian industry globally competitive.
GST being a streamlined single taxation system a more business-friendly tax environ is created. Particularly, the taxes for goods and services being the same the calculation will much smoother and result in increased compliance.
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