Essay on GST for Class 10, 12, Mains Exam (UPSC, PSC, SSC)
Introduction: GST is the abbreviation of Goods and Service Tax that was introduced by the Kelkar Committee Trust to reduce the cascading consequences of other indirect taxes levied by the Central and State government. GST counts as one of the indirect taxes that has replaced other indirect taxes like Custom Duties, Service Tax, Excise Duties, Value Added Tax and other State Indirect taxes. The rate of GST is calculated around 14% – 15% and it is applicable on certain goods and services all over India. The manufacturer pays GST on the raw material he purchases. The service provider pays GST for the product he purchases. The retailer pays GST for the product he purchases from the distributor and finally the consumer pays GST for the purchase he makes.
Types of GST: GST are of four types:
- Integrated Goods and Services Tax: It is levied on exports and imports between two states.
- Union Territory Goods and Services Tax: It is levied on the goods and services in the United States of India.
- Central Goods and Services Tax: It is levied on goods and services within the same state (intrastate)
- State Goods and Services Tax: It is levied on goods and services within the same state (intrastate)
GST registration: Any company who has an annual income of20 lacs per annum or more is eligible for GST registration. Penalty charges will be applied if the organization runs the business without registering on the GST portal of the government. GSTIN is the registration number provided to the entities who have registered in the government’s GST portal.
Benefits of GST: Besides being advantageous to the business and industry, GST also credits the government and the consumers. The benefits of GST are listed below as follows:
- GST makes business neutral by making the rates of indirect taxes common across the country thereby maintaining the uniformity in the tax rates.
- GST has reduced the cascading effects of other indirect taxes, thereby reducing the hidden cost of running a business.
- GST has increased and improved competitiveness in the trade market owing to reduced cost of transaction. This also has reduced the compliance cost and boosted Indian exports.
- GST is simple and easy to administer so it has been successful in replacing all other forms of indirect taxes.
- GST results in the efficiency of higher revenue as it has decreased the cost of collection of various other tax revenues.
- GST serves as the one tax form from the manufacturer to the consumer leading to the transparency of the tax payable by the consumer.
- GST serves as a relief to the tax burden as it is essentially a tax levied at each stage starting from production to consumption.
Problems of GST:
- GST is totally a different form of taxation. For this the Centre and the State require administrative staffs to be trained for the concept and procedure of execution.
- Few manufacturing states are losing out on revenues.
- The financial freedom of many states has reduced.
- There should be a rigid IT backbone to ensure effective and smooth way of tax payment, registration and return filing.
- The central government is facing challenge to bring maximum states of the country under GST.
Conclusion: In the long-drawn conclusion, we can say that, GST should be implemented everywhere in the country to compete with the other developed countries of the world. Since 2017, GST has proved to be the one-waytaxation system maintaining its transparency throughout. It is an optimist step to transform the Indian economy from the informal to the most likely formal one. To ensure that the economy is smooth running, GST plays a pivotal role in the Indian trade market.
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