The recent changes in the tax system have generated thousands of questions in the minds of common Indian men. GST or the Goods and Service Tax promises to help the consumer to a great extent according to the current Indian government.
Here, in this article, we will discuss the most necessary questions regarding this bill.
How does the GST work?
GST is a single tax that is applied to the supply of goods and services. When a manufacturer offers his products or services to the consumer, the credits of input taxes are paid at every stage. This way, the end consumer only has to pay the last GST that is charged by the final dealer. This makes it easier for the consumers to avoid the multiple indirect taxes.
Why is this bill necessary?
The Centre and State government levy multiple indirect taxes without any tax credits according to the stages of value addition. This is the reason every product faces the burden of multiple hidden taxes.
With the GST bill, the government promises to bring the much-needed transparency in the dealing between the manufacturer and consumer. The taxes on services and goods will become much more transparent and the consumers will become free to save themselves from the hidden taxes.
Along with that, this bill also has the ability to reduce the burden of overall taxes that a common man has to handle. This is possible due to the tight tax system in the supply chain, which can prevent the leakages of gains. Each and every level of the supply chain can get the efficiency gains with the GST bill. The overall tax on almost all commodities will reduce, which is necessary for the consumers in this country.
What are the changes in the tax rates?
The recently passed GST bill has made it clear that the taxes on various goods and services have an average range of 18%-20%.
But this seems like the taxes have increased, right?! No. you need to think with more insights in order to understand the number game here.
A common in this country pay a number of indirect taxes on a daily basis. Before the GST bill, the standard excise duty on purchasing goods were 12.5% along with the VAT of 14%. So, the overall tax on purchasing goods was around 28%. This was happening because you were facing the tax on the tax issue. Similarly, the service tax rate was 15%.
But now, when the GST is here, the tax rates have come under the range of 18% to 20% on an average. Hence, the common man can now save tax on various and products. The taxes on small cars, FMCG products are about to go down. However, as the numbers show, the services such as rail transportation, banking, air travel and other services are getting an increase in the taxes.
It is important to understand that the prices on the goods and services depend on various factors. Hence, it would be wise to take the mentioned numbers as the overall indicator of the GST bill.