6 09 2016
Everybody is talking about GST. The common man seems to be not aware of its implication as it is not clear whether it will benefit after its implementation from April 1, 2017.
So what is GST?
I asked some of my professional friends. Some said “It is General Sales Tax with some reforms.” Others said, “It is central government’s way of introducing a new form of tax and to give a rosy picture. Ultimately it is all a method to hoodwink the common man. Anyway the Taxes are not going to lower and Prices are not going to come down.”
They seems to be confused and could not give proper reason except for my friend in Accounts who said GST is “Goods and Service tax” and that it will do away with multiplicity of taxes. I asked him whether it is a good thing and whether it will benefit him. He seemed to be unsure. Only thing he said is that the service tax which he is paying for translation service will not be there and it will be replaced with GST with slight increase in taxes.
I figured out after some reading, GST is really a good thing happening as there will now be one single Indirect tax for the whole nation for the supply of goods and services.
Here is an example of how GST works
|Current System||New GST|
|Manufacturer to Retailer = Raw Material cost Rs 100 + Tax on Raw Material Rs 10 + Value added by manufacturer Rs 20 + Tax on Value Rs 2 = Rs 132||Manufacturer to Retailer = Raw Material cost Rs 100 + Tax on Raw Material Rs 10 + Value added by manufacturer Rs 20 + Tax on Value Rs 2 = Rs 132|
|Retailer to Consumer = Purchase price Rs 132 + Retailer Margin Rs 20 = Selling Price Rs 152 + Rs 15.2 Sales Tax (assumed 10% on selling price) = Final Price Rs 167.50||Retailer to Consumer = Purchase price Rs 132 + Retailer Margin Rs 20 = Rs 152 + Rs 2 Tax on the margin amount of Rs 20 =Final Price Rs 154|
|Total Tax burden to Consumer Rs 10 + Rs 2 + Rs 15.2 = Rs 27.2||Total Tax burden to Consumer Rs 10 + Rs 2 + Rs 2 = Rs 14|
Document the GST and Translate in all Indian Languages
Is it not the right time for the Government to explain in the most simplified manner what GST is all about?
Spread the message of GST in all 22 Official Indian Language through Print, Audio-Visual and Film in all 22 official Indian languages to educate the masses. This will ensure that the local dealer is not adding GST as one more tax and dupe those who are ignorant about GST.