Goods and Services Tax (GST) in India came into effect from 1st July 2017 through the implementation of One Hundred and First Amendment of the constitution of India by the government. The tax replaced many cascading taxes levied by the central and state government.
Earlier, there was many kind of taxes that were charged at various levels such as sales tax, vat, etc. But the government came up with the single tax named GST.
The GST was launched at midnight on 1st July 2017 by the President of India Pranab Mukherjee and the Government Of India. The launch was marked with a historic misnight session of both the parliament houses and parliament conveyed at the central hall of the parliament. It was attended by the high profile bureaucrats and businessmen such as Ratan Tata. It was still opposed by the opposition due to the predicted problems that it was bound to lead for the middle and lower class of Indians.
Goods and services are divided into five tax slabs for collection of tax – 0%, 5%, 12%,18% and 28%. However, Petroleum products, alcoholic drinks, electricity, are not taxed under GST and instead are taxed separately by the individual state governments, as per the previous tax regime.There is a special rate of 0.25% on rough precious and semi-precious stones and 3% on gold. In addition a cess of 22% or other rates on top of 28% GST applies on few items like aerated drinks, luxury cars and tobacco products.Pre-GST, the statutory tax rate for most goods was about 26.5%, Post-GST, most goods are expected to be in the 18% tax range.
After its launch, the GST rates have been modified multiple times, the latest being on 22 December 2018, where a panel of federal and state finance ministers decided to revise GST rates on 28 goods and 53 services.
The GST council meet on December 22 came to the point that the rates on 28 good s and 53 services will be slashed to certain levels. TVs and movie tickets were the most trending. Stars from the Bollywood industry tweeted their vote of thanks to the government and Prime Minister of India. The goods on which GST has been lowered to 18 per cent from 28 per cent at present include pulleys, transmission shafts and cranks, gear boxes, retreaded or used tyres, power banks of lithium ion batteries, digital cameras, video camera recorders and video game consoles. Of the 23 goods and services on which rates have been slashed, tax rate on seven items in the 28 per cent slab has been brought down. With this, only 28 goods are left in the highest 28 per cent tax bracket.The reduced rates are likely to come into effect from January 1, 2019, Finance Minister Arun Jaitley told reporters after the 31st meeting of Goods and Services Tax (GST) Council here.
When asked about his message to the industry to pass on the rate cut benefits, Jaitley said, “There is already anti-profiteering authority, which has been more than active. Of course, they have to pass on the rate benefits. Or we will do what we did in case of restaurants”.
Jaitley further said that the Council has decided that businesses which are supposed to pay GST and file returns but have not done so far, should file it by March 31, 2019, to avoid penalty.
Revenue Secretary Ajay Bhushan Pandey said that the new return filing system will be launched on trial basis from April 2019 and would be made mandatory from July 1, 2019.