GST is a single tax which will be applied singly throughout the length and breadth of the country with the specified percentage of tax applying to only the specified commodities. The taxation system before the implementation of the GST had involved the implementation of indirect taxes at every stage of business, trade and normal buying and selling of goods and services.
For example,: A customer bought chocolate. Now the shopkeeper had bought the chocolate from the wholesaler and paid to him the charges of the chocolate+ the sales tax. The wholesaler had bought the chocolate from the manufacturer and paid the charges + the sales tax. So like this, the customer who had finally bought the product will now pay all those extra charges levied at each stage of this chocolate business. So this was going on, on all the commodities, involving so many hidden taxes. Moreover, there were several tax rates like Excise and Customs duty, a different set of rates for different States in India and also the central levied tax was at different rates. It was a highly complex system.
Now, what GST is going to do is that it would do is remove all the indirect “double and quadrupled taxation” that was the resultant of charges levied at each stage. Although in the GST policy too, the customer will have to pay the final GST on the goods or services purchased, but the difference lies in the removal of the unnecessary taxes that were levied earlier.
It is clearly depicted here in the chart below.
Image source- relakhs.com
See, what is happening in the chart is that at every stage the GST is claimed back. Right? So, there is not the addition of taxes which was in the earlier policy. It was “Tax on tax” policy. Now it will be just one tax that will be levied on the final consumer. The consumer will definitely be bearing this tax, but on the whole, he or she will be paying it at a reduced rate as compared to the earlier tax policy.
Passing of GST Bill
The GST Bill saw a tumultuous time and came about after 13 years of journey. Beginning from 2003, going through preparations, and a lot of heated debates, it ended finally on the table of the President Pranab Mukherjee in August 2016. Several states in India ratified the GST bill, and the assemblies passed. The GST is implemented the entire nation from 1st July 2017. It is such a historic day that it seems it is a day for the common man. Only the business class is protesting against it because of the removal of double taxation.
The impact it is going to create is highly supportive and friendly for the future. The present business class will suffer a little, especially the honest ones. But in the long run, it is actually going to help all the classes, without any discrimination. If double taxation is avoided, then the simple tax will help the common masses. In turn, the money earned through honesty is going to be beneficial to the business class. In no way, it is going to harm anybody. As far as the initial problems are concerned, so dear readers, if one person is suffering from a disease, then to get well soon, he or she will have to bear the pain of injections or drips or bear the bitterness of pills and all.
How can anybody become happy without going through pain?
The assessment techniques -
To click on the right option in life is to click on the right always. Even when one faces strongest storms, then too, he will never fall down because his hand will be held by a powerful positive force. To many people, GST might appear as a negative force which snatching their financial rights, but what actually appears wrong to people is really right in this world. What is seen, that does not happen and what happens is not seen.
So, here I am presenting the game changer of India “GST”. (Applause please)
Let’s talk about some major points which define the character of GST. First of all, let’s have a look at how the assessment of GST will be taken up.
1) Audit – To simplify things for people, auditing here means investigating records of the person who is eligible to pay tax, and his or her financial or business turnover is exceeding the set limit. (The limit is 1 crore according to the Indian government).
2) Assessment – It means determining the tax liability of the taxpayer. It consists of the following types of assessment –
i) Self-Assessment – This means that the taxpayers can check how much tax they have to pay.
ii) Provisional Assessment – The taxpayer can request the concerned officer to assess the taxpayer’s tax to be paid if he or she has not been able to assess it appropriately.
iii) Scrutiny of returns – The concerned officer can verify or scrutinise the documents for the taxpayers and also conduct an inquiry on any kinds of discrepancies in paying the tax by the taxpayers.
If any person does not file his or her return even after getting a notice, then the official will look into the case according to the best of his judgment.
For the unregistered
People who have not enrolled for the GST, then those people need not worry as they will also get an opportunity to be heard. The officials would assess the tax liability of such people and would send them a show cause notice.
What are demand and recovery provisions?
Demand and Recovery provisions are part of GST policy that is applicable when a taxpayer has not paid the tax, or there is some discrepancy in a case. There are some key points because of which demand and recovery provisions become alive. The Demand and Recovery provision is applied on the part of the government. The situation may arise if –
1) There is inappropriate refund or short paid tax or unpaid tax (in non-fraud cases.
2) There is inappropriate refund or short paid tax or unpaid tax (in fraudulent cases).
3) Tax is collected but it is not duly paid to the government
4) If CGST/SGST is paid in place of IGST or vice versa.
So on such demands of GST payment, recovery options will be available with the IT department. They will begin the proceedings of recovery of tax from the concerned people on the basis of the records verified.
Image courtesy- relakhs.com