Society Now: Society Management Software

Society Management System in Pune:-

What is GST?

GST – Goods & Services Tax is all set to be one of the most impactful economic reforms to be implemented in last few decades and is already being labeled as a major social reform too.

What Is Wrong with The Current Tax System?

Though India is politically one country, economically it is fragmented. There are multiple taxes when there is commerce across state borders. Consequently, it increases costs for everyone and makes economic activity within India for Indians complicated.

Presently, taxes are of two types – Direct and indirect, which are levied either by the central government or the state government. Direct taxes, like your income tax come under the central govt. And taxes levied on the manufacture of goods and providing services are called as indirect taxes, they are also levied by the central govt. Taxes on consumption are exclusively levied by the state government.

The issue with this system is that sometimes, a product may have multiple tax layers to it. Eg – consider a dress. It first needs to be manufactured before it is consumed. So the Centre levies a tax at the factory level and then the state levies a tax at the shop (VAT), just before it is consumed. On an average, excise duty is charged at 12% and VAT at 18%, that means an average consumer pays 26% in taxes. The resultant MRP is therefore, a lot higher than the actual retail price.

GST is an indirect tax and will attempt to create a single market for goods by taking away the tax barriers between the various states.

Presently, taxes are of two types – Direct and indirect, which are levied either by the central government or the state government. Direct taxes, like your income tax come under the central govt. And taxes levied on the manufacture of goods and providing services are called as indirect taxes, they are also levied by the central govt. Taxes on consumption are exclusively levied by the state government.

Though India is politically one country, economically it is fragmented. There are multiple taxes when there is commerce across state borders. Consequently, it increases costs for everyone and makes economic activity within India for Indians complicated.

The issue with this system is that sometimes, a product may have multiple tax layers to it. Eg – consider a dress. It first needs to be manufactured before it is consumed. So the Centre levies a tax at the factory level and then the state levies a tax at the shop (VAT), just before it is consumed. On an average, excise duty is charged at 12% and VAT at 18%, that means an average consumer pays 26% in taxes. The resultant MRP is therefore, a lot higher than the actual retail price.