What is GST?

GST is Goods and Service Tax. It is one of the biggest reforms in the indirect taxes of India. GST is the single tax that is levied on the supply of goods and services.

GST is also a destination based tax. GST has replaced taxes such as, Central Excise Law, Service Tax law, VAT, Entry Tax, Octroi, and similar fringe taxes. GST is expected to bring together the state economies and help in improving over all economic growth of the country.

GST is a comprehensive indirect tax, that is levied on manufacture, sale and consumption of goods. GST is also levied on national level services. GST is designed to replace all indirect taxes levied on goods and services, by the state and the central governments. Businesses are now needed to obtain a GST Identification Number. This has to be done in every state, where the businesses are registered.

As stated earlier, the GST is a destination based tax. This tax is collected by the state government, where the goods have been consumed.

GST has been implemented in India from July 1st, in the year 2017. This GST has a dual GST model, in which both the state and the Centre levies tax on Goods and Services or on both of it.

Advantages of levying Goods and Service Tax-

  1. GST is a tax that shows complete transparency.
  2. GST helps in reducing number of indirect taxes, levied both by the state government and the central government.
  3. GST is not a cost to the registered retailer. So, the prior options of hidden tax is now totally removed.
  4. GST helps in lowering the cost of business.
  5. GST helps in bringing down the prices of goods and services and thereby, helps the consumers.
  6. GST helps in increasing the consumption of goods and services, by lowering the prices.
  7. There is no doubt that in production and distribution of goods, services are used increasingly or consumed and same vice versa.
  8. GST has removed the complications, previously experienced in the system of separate taxes for goods and services, that required division of transaction values into value of goods and services for taxation. It always led to greater complications in administrations, including the cost for compliance.
  9. GST has helped in integration of all taxes and thus, helped in splitting the taxation burden to be split equitably between manufacturing of goods and the services.
  10. GST is a tax that is levied only on the final destination of consumption of goods or services. It is based on the principles of VAT. GST is never levied at various points, ranging from manufacturing point to the retail outlets. This greatly helps in removing the economic distortions and bring about a development of a common national market.
  11. GST will greatly help in building a tax administration, which would be free from corruptions and be purely transparent.
  12. Currently, GST removes the practice of dual tax payment system. Previously, tax was levied on goods when the finished goods came out from the points of manufacturing. Another tax was levied on the goods when it was sold at the retail outlet.
  13. GST is supported by GSTN. This GSTN is a fully integrated tax platform, that handles all aspects related to GST.

Disadvantages of levying Goods and Service Tax-

  1. GST is expected to have a negative impact on the real estate market, as per the opinion of some economists. GST will add up to the cost of new homes, new houses, by 8% and thereby, reduce the demand of new houses by about 12%.
  2. Some of the experts are of the opinion that the Central Goods and Service Tax, CGST, and State Goods and Service Tax SGST, are nothing but new names given to the old Central Excise Service Tax, Value added Tax VAT and Central Sales Tax or CST. So, the claim made by GST of reducing the tax layers is wrong.
  3. Some of the products, sold in retail, have only a tax of 4% levied on them. But garments and clothes in this segment have become more expensive, after being subjected to the newly implemented GST.
  4. GST has affected the aviation industry in a negative manner. The existing service taxes on air fares were ranging between six percent to nine percent. But with implementation of GST, the tax on air fare has surpassed fifteen percent that effectively doubles the rate of tax.
  5. This new GST system will be facing new teething problems in adoption and migration to the new GST system. This will be having difficulties in learning the entire eco system.

Common Man Benefits in purchasing items-

  • Prices of movie tickets may become cheaper in most states
  • Dining in restaurants may also become cheaper.
  • Price of Two-wheelers is expected to come down.
  • Entry-level sedan (except small cars) prices are expected to come down.
  • Prices of SUVs and luxury or premium cars is expected to be lower.
  • Price of Televisions will be less.
  • Price of Washing machines is expected to be less.
  • Price of Stoves are to be at the lower side.

Common Man losses in purchasing items-

Items those are expected to be get costlier after implementation of GST, for the common man.

  • Mobile bills will be more than before.
  • Renewal premium for life insurance policies will increase because of taxes.
  • Banking and investment management services will become costlier.
  • Basic luxuries for a common man like WIFI and DTH services, online booking of tickets may become costlier.
  • Residential rent will be costlier with GST.
  • Health care will now be expensive with GST.
  • School fees will be expensive with taxes.
  • Courier services will have increased prices with GST.
  • Commuting by metro or rail may become expensive.
  • Aerated drinks will become costlier.
  • Cigarettes and tobacco products will become expensive.

Goods and service Tax is implemented in this country with the view of making the tax system simpler. However, it may make certain people unhappy. But it is destined to make lots of people happy.


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Due Dates

  • Due date for deposit of Tax deducted/collected for the month of January, 2024. However, all the sum deducted/collected by an office of the government shall be paid to the credit of the Central Government on the same day where tax is paid without production of an Income-tax Challan

    Feb 07th ,2024
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