The introduction of Goods and Service Tax (GST) was a significant step in the field of indirect tax reforms in India. Before GST was introduced, there was a multiplicity of indirect taxes. The global history of GST dates back to 1954 when France became the first country to implement this tax reform. Since then, over 160 countries have adopted this tax system. In India, the Vajpayee government began discussions on GST by setting up an empowered committee headed by Asim Dasgupta, the then West Bengal Finance Minister, to design the GST model.

The idea of a nationwide GST in India was first proposed by the Kelkar Committee in 2004. The committee recommended a nation-wide GST structure. The first announcement of the introduction of GST was made in the budget speech on 28th April, 2006 by the then Finance Minister P. Chidambaram.

The Constitution of India was amended on 16th September, 2016 to make provisions for the introduction of GST. With this amendment in the Constitution, both the Centre and the states were given concurrent power to levy and collect  GST on both goods and services. In India, GST came into effect in 2017 bearing a dual structure.

Acts Passed By The Parliament and States 

GST was rolled out in India on 1st July 2017. The following acts have been passed thereof, with the approval of President of India  on 12th April, 2017.

  1. The Central Goods and Service Tax Act, 2017 (CGST)
  2. The Integrated Goods and Service Tax Act, 2017 (IGST)
  3. The Union Territory Goods and Service Tax Act, 2017 (UTGST)
  4. The Goods and Service Tax (Compensation to States) Act, 2017 (Compensation Cess) 

The CGST and IGST acts extend to the whole of India including the union territory of Jammu and Kashmir.

What Is GST? 

GST, or  Goods and Services Tax, is the single tax levied on the process of manufacturing to consumption of goods and services, eliminating all earlier indirect taxes. 

Article 366 (2A) of the Constitution of India defines Goods and Service Tax as a tax on supply of goods or services or both, except tax on supply of alcoholic liquor for human consumption.

Note the word ‘supply’ is used and not ‘sale’. Hence,  free supply will be subjected to GST in several cases.

GST has replaced the following indirect taxes:

Levied By The Central Government 

  • Central Excise Duty 
  • Duties of Excise (Medicinal and Toilet Preparations)
  • Additional Duties of Excise (Textile and Textile Products)
  • Additional Duties of Customs (commonly known as CVD)
  • Special Additional Duty of Customs (SAD)
  • Service Tax 
  • Central Surcharges and Ceases (as long as they relate to supply of goods and services)

Levied by the State Governments 

  • State VAT (Value Added Tax)
  • Central Sales Tax 
  • Luxury Tax 
  • Entry Tax 
  • Entertainment and Amusement Tax (except when levied by local bodies)
  • Taxes on advertisements
  • Purchase Tax 
  • Taxes on lotteries, betting and gambling
  • State Surcharges and Cesses (as long as they relate to supply of goods and services)

GST Rates 

In India, goods and services under the purview of GST have been divided into five categories based on GST rates – 5%, 12 %, 18 %, 28 % and zero %. These rates are revised from time to time by the GST Council.

The rate levied depends on whether the goods or service is a necessity or luxury. Generally necessities have a lower tax rate whereas luxury items or services have a higher tax rate. Also, GST on Gold is 3 % and 0.25 % on semi-precious and rough stones. GST on all types of salt is zero %.

Advantages of GST 

Eliminates Cascading Effect 

GST removes the cascading effect on the sale of goods and services which directly reduces the cost. Since Tax on Tax is eliminated by GST, it ultimately results in a decrease in cost of goods and services which benefits businesses as well as end-users.

Digitalised System 

Simplified and automated procedures for various processes such as registration, returns, refunds, tax and payment are available and all the interactions can be done through the GST portal.

Make In India To Boost SMEs and MSMEs 

GST  helps boost export and manufacturing activities by harmonising tax laws and procedures. As GST replaced numerous levies and taxes, it has made the process of tax filing simpler, systematic and streamlined. This has enabled SMEs and MSMEs to channelise their manpower and other resources towards business growth and development. 

With Bikayi, businesses could increase sales by launching themselves on a platform, and by accruing the benefits of its integrators and the facility of managing their business online with easily operable features for the front end users.

Improved Logistics For SMEs and MSMEs 

Under GST, there is no entry tax on goods sold in any part of India. This helps speed up the businesses and movement of goods across the country thereby improving logistics. For example, the shipping and delivery facilities of Bikayi helps you integrate with its shipment partners like Ship Rocket, Pickrr, WareIQ and Delhivery.

One Unified Market Place 

Because of GST, MSMEs would be able to have a marketplace with all their processes unified under a single roof, like the Bikayi app, which not only helps bring your businesses online but also helps you streamline your online business procedures like shipments, pricing, catalogues creation, digital marketing, integration of shops on other platforms like Facebook, managing your inventory etc.


GST Returns for SMEs and MSMEs

All Micro, Small and Medium Enterprises (MSMEs) fall under the category of small tax-payers and therefore have been sanctioned certain benefits. Considering the differences between small businesses and larger enterprises,…

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