GST Essay in English is a very informative and interesting article on GST (goods and services tax). GST is the most revolutionary tax reform since independence. It is going to replace all measure indirect taxes that are applicable in our country.
Before discussing GST Essay in English, let us understand the past tax system applicable in India.
Tax Categories Before GST
There were two broad categories of taxes –
First, Direct taxes
Second, Indirect taxes
Direct taxes are the taxes which are imposed on a person and are paid to the government by the taxpayer himself.
For example, income tax.
If income tax is liable on any person, he has to pay directly to the government.
On the other hand, indirect taxes are imposed on goods and services and are paid indirectly to our government via the third person.
For example, service tax.
When you go and dine in a restaurant, you pay the tax to the owner of the restaurant included in the bill. Then the restaurant owners pay the service tax to the government. It means you pay the service tax via the third person like restaurant owners. So it is an indirect tax.
Who levies the Indirect Taxes?
In our country, Indirect Taxes are levied by the Central Government as well as the State Government. Let us see the taxes of the Central and State Government in detail to make GST Essay in English more understandable.
Major Taxes Levied by the Central Government
Some major taxes levied by the central government are –
- Excise Duty – It is charged on the goods produced by the manufacturing companies.
- Service Tax – It is a charge on the provision of taxes.
- Central Sale Tax (CST) – It is a charge on interstate sales of goods. it means when goods are sold from one state to another.
- Custom Duty– It is a charge on export and import of the goods.
Major Taxes Levied by the State Government
Now, let us see some major indirect taxes levied by the state government.
- Value Added Tax or Vat – It is levied on the goods sold within the state.
- Entertainment Tax – It is levied on the various form of entertainment. For instance, a movie ticket.
- Luxury Tax– It is a charge of luxury hotel rooms.
- Octroi / Entry Tax – It is a charge on the goods which enter the state from the other states.
It was an overview of the taxes levied by the state and central government indirectly.
Now, let us come to the point i.e. GST in the article GST Essay in English.
What is GST?
It is an indirect tax levied on goods and services. GST replaces major indirect taxes which are levied by the centre and state government.
What does it mean?
It means GST replaces excise duty, service tax, vat etc. There are two parts of GST-
- Central GST (CGST)
- State GST (SGST)
It means all the central taxes like Excise Duty, Service Tax, CST and Custom Duty are replaced by CGST.
And all the state taxes are replaced by the SGST.
What are the benefits of GST?
This is a very important part of the article GST Essay in English. Let’s see below.
It replaces all major indirect taxes.
It removes the cascading effect.
Now, what is the cascading effect? It means that there is no tax on previously imposed taxes.
In simple word, there is no tax on tax. For instance, a manufacturer produces an item for rs 100. He charges excise duty at 12 % and sells it to the shopkeeper for rs 112.
The shopkeeper sells the same item to the consumer after charges VAT at 12.50%. In this case, he sells it at rs 126. This rs 14 has two components – First, rs 12.50 and, The second rs 1.50 which is a charge as excise duty.
In this case, VAT is charged on the Excise Duty. So the consumer has to bear the extra burden. This is the cascading effect. GST removes cascading effect as there is a single tax applicable.
GST reduces the flow of black money.
Black money is the money on which people do not pay tax to the government.
Some people do not report every transaction. They do not pay taxes to the government. By doing this, they save indirect taxes. They also report fewer incomes than the actual one. GST is the single tax on sales and goods from the manufacturer to the consumers. Therefore, they insist on making the bills of every transaction.
GST has a paper trail, which can be accessed by the income tax department. PAN card and AADHAR is there to file GST returns. This helps the income tax to track transactions.
One India one market
India facilitates by making India one India. There are dozen of taxes that prevent India to become a common market. GST imposes single tax all over the country on the product, sales and services.
Seamless flow of goods across the nation.
In many occasions, you might see a long line of trucks on states borders. The trucks running interstates have to pay the entry tax to the state government. Every time the goods move from one state to the other, need to pay the octroi tax.
These taxes are collected by the individual states. Imagine a situation where trucks pass multiple states. According to the roadways study, a truck running interstate has to cross about 16 toll plazas and borders. And every time they have to go through the hectic process of documentation.
There is a CST for interstate movements of goods. Cosigners has to show documents related to the CST and other taxes. Moreover, some manufacturers do not supply goods for the other states because of the CST and octroi tax.
As a result, GST provides easier transportation of goods from one state to another. It also reduces the cost of goods.
Ease of doing business
Apart from having a common market, there is the ease of doing business. Earlier a businessman has to get registered at the various tax authorities. He has to maintain many papers and file different tax returns.
After the implementation of the GST, there is single registration, single return and less paperwork. The businessman can put his energy in doing business rather than standing in the queue for the tax returns.
Now, let us come to the most important part of GST Essay in English.
Rate of GST
Let’s go ahead and continue the article GST Essay in English with the rate of GST. Government has recently announced the rate of GST. Four main tax slabs are ranging from 5 % to 28 %.
According to the government, these four rates are 5 %, 12% 18% and 28 %.
The first, essential items including food items are taxed at 0%.
The second, the lowest 5 % rate is for the commonly used items.
The third, 12% and 18 % are two standard rates.
The forth, highest 28% is for the luxurious items.
Impact of GST on a Common Man
Now, let us see how it is going to impact on a common man. In the past tax regime, the indirect taxes on goods are 27 to 32% of the cost in general. About 15% of the cost, there was an indirect tax on services.
After GST coming into existence, the cost of goods is likely to come down while the cost of services will rise. However, the overall burden on the consumer is likely to reduce in general. There are some items on which GST is not applicable, for example, alcohol, tobacco, petroleum products, electricity bills etc. These items remain their current tax structures.
I, strongly believe that the article GST Essay in English helped you to understand GST better. Do comment in the comment section below.