GST was introduced in India on July 1, 2017, as a single indirect tax for the nation, replacing multiple cascading taxes levied by the central and state governments. It was passed as The Constitution (One Hundred and First Amendment) Act, 2016, following the passage of the Goods and Services Tax Bill, 2016, in the Lok Sabha on March 29, 2017. The Rajya Sabha cleared the bill on April 6, 2017. As per Article 246A of the Indian Constitution, Parliament can make tax laws concerning goods and services.
In India, GST is levied on the supply of goods and services. It is a comprehensive, multistage, destination-based tax: complete because it has subsumed almost all the indirect taxes except a few state taxes; multistage because it is levied at every step in the production process but is refunded to all parties in the value chain except the final consumer; destination-based because it is levied on consumption, not production.
GST is levied on the value or price of a product at each stage of the production process, from manufacturing to final sale. The tax levied on the matter or cost of a product at each stage of production is called the tax credit or input tax credit. The tax credit can be used to offset the tax liability on the final product.
Did you know ?The GST Council, the body responsible for overseeing GST, is composed of 33 members, of which 2 come from the federal government and 31 come from the 28 states and 3 union territories that have passed legislation.
What is GST?
GST is levied on the supply of goods and services. It is a comprehensive, multistage, destination-based tax: comprehensive because it has subsumed almost all the indirect taxes except a few state taxes; multistage because it is levied at every step in the production process but is refunded to all parties in the value chain except the final consumer; destination-based because it is levied on consumption, not production. GST is levied on the value or price of a product at each stage of the production process, from manufacturing to final sale. The tax levied on the matter or cost of a product at each stage of production is called the tax credit or input tax credit. The tax credit can be used to offset the tax liability on the final product.
Also Read: What is GST? Goods And Services Tax Explained With Benefits
10 Major Reduction of GST rates (Since the Start of April 1 2022)
10 Major Reduction of GST rates that have been witnessed in the 2022-23 financial year are as follows-
1. GST on Cars and Two-wheelers to be Cut to 18% from 28%
The reduction in GST on cars and two-wheelers is expected to boost the automotive industry, which has been struggling recently. The GST cut will make vehicles more affordable for customers and trigger car demand. The move is also expected to increase GST collections as more people can now afford to buy vehicles.
2. GST on Aircraft to be Reduced to 5% from 18%
The reduction in aircraft is expected to boost the aviation industry, which has been struggling in recent times. The GST cut will make aircraft more affordable for customers and trigger demand for aircraft. The move is also likely to increase GST collections as more people can now afford to buy aircraft.
3. GST on Shipbuilding to be Cut to 5% from 18%
The reduction in GST on shipbuilding is expected to provide a boost to the shipbuilding industry, which has been struggling in recent times. The GST cut will make shipbuilding more affordable for customers and trigger demand for ships. The move is also expected to increase GST collections as more people can now afford to buy ships.
4. GST on School Bags and Educational Materials to be Cut to 5% from 18%
The reduction in GST on school bags and educational materials is expected to boost the education sector, which has been struggling recently. The GST cut will make school bags and educational materials more affordable for customers and trigger demand for these products. The move will also likely increase GST collections as more people can afford to buy these products.
5. GST on Mobile Phones to be Cut to 12% from 18%
The reduction in mobile phones is expected to boost the mobile phone industry, which has been struggling in recent times. The GST cut will make mobile phones more affordable for customers and is expected to trigger demand for mobile phones. The move will also likely increase GST collections as more people can afford to buy mobile phones.
6. GST on Televisions to be Cut to 18% from 28%
The reduction in GST on televisions is expected to provide a boost to the television industry, which has been struggling in recent times. The GST cut will make televisions more affordable for customers and is expected to trigger demand for televisions. The move will also likely increase GST collections as more people can afford to buy televisions.
7. GST on Imported Books to be Cut to 5% from 18%
The reduction in imported books is expected to boost the book industry, which has been struggling in recent times. The GST cut will make books more affordable for customers and trigger demand. The move will also likely increase GST collections as more people can afford books.
8. GST on Movie Tickets to be Cut to 18% from 28%
The reduction in movie tickets is expected to boost the movie industry, which has been struggling in recent times. The GST cut will make movie tickets more affordable for customers and trigger movie demand. The move will also likely increase GST collections as more people can afford to buy movie tickets.
9. GST on AC and non-AC Restaurants to be Cut to 5% from 18%
The reduction in AC and non-AC restaurants is expected to boost the restaurant industry, which has been struggling in recent times. The GST cut will make restaurants more affordable for customers and will trigger demand for restaurants. The move is also expected to increase GST collections as more people can now afford to eat out at restaurants.
10. GST on Hotel Rooms with a Tariff Below ₹7,500 to be Cut to 12% from 18%
The reduction in GST on hotel rooms with tax below ₹7,500 is expected to boost the hotel industry, which has been struggling in recent times. The GST cut will make hotel rooms more affordable for customers and will trigger demand for hotel rooms. The move is also likely to increase GST collections as more people can now afford to stay in hotels.
The effect of these changes on GST collection is expected to be positive. The government hopes the reductions will boost consumption and help businesses grow.
Also Read: Composition Scheme Under GST - All you Need to Know About GST Composition Scheme
Miscellaneous Increases in GST Rates on Some Items.
The government has proposed to increase the GST rate on certain items, including hair oil, footwear, and sanitary napkins, in the upcoming budget. The proposal aims to relieve small and medium enterprises (SMEs) struggling to cope with the increased cost of raw materials.
The GST Council will likely consider the proposal in its meeting on August 21. If approved, the new rates will come into effect from April 1, 2022.
The government had increased the GST rate on several items, including mobile phones, televisions, and cars, to boost revenue collections. However, the move was criticised by industry experts, who said it would increase the prices of these products and hit consumption.
GST Slab After 1 April 2022 Explained
After the implementation of GST, there has been a major shift in how indirect taxes are levied in India. The GST Slab After 1 April 2022 has been designed to relieve the common person and promote economic growth. The GST Slab After 1 April 2022 is divided into four slabs – 5%, 12%, 18% and 28%. The 5% GST Slab applies to essential goods and services such as food, healthcare and education. The 12% GST Slab applies to mobile phones, television sets and computers. The 18% GST Slab applies to ACs, refrigerators and washing machines. The 28% GST Slab applies to luxury cars and tobacco products.
The GST Slab After 1 April 2022 has been designed to relieve the common person and promote economic growth. The 5% GST Slab applies to essential goods and services such as food, healthcare and education. The 12% GST Slab applies to mobile phones, television sets and computers. The 18% GST Slab applies to ACs, refrigerators and washing machines. The 28% GST Slab applies to luxury cars and tobacco products.
Other Significant Changes
The most recent changes that have been seen in 2022 in GST legislation along with their dates of announcement are as follows-
September 28, 2022
- Notification of changes to the ITC criteria in Finance Act 2022.
- The deadline for submitting ITC claims and amending sales/credit-debit notes for a fiscal year has been extended to the 30th of November of the year after the fiscal year.
September 1, 2022
- On the GST portal or government portal, the most recent updates to Table 4 regarding reporting of ineligible input tax credit are now online.
August 1, 2022
- According to Central Tax Notification No. 17/2022, the e-invoicing system will be made available to businesses with an AATO of more than ₹10 crore starting on October 1, 2022.
- Six-digit HSN codes are now required in Table 12 of GSTR-1 for companies with annual revenue over ₹5 crore.
5th July 2022
- A new table 3.1.1 in the GSTR-3B format was added to report e-commerce sales and the taxes owed on them for both e-commerce operators and e-commerce sellers. Tables 3.2 and 4 have undergone a few more modifications. The government portal has live versions of all revisions except table 4. Look at the GSTR-3B's new format.
- The Finance Act of 2022's Section 110 was announced. Therefore, a taxpayer may only use form PMT-09 to transfer CGST or IGST as a distinct person from one GSTIN to another.
- A late filing fee waiver extends the GSTR-4 due date for FY 2021–22 to July 28th, 2022. The deadline for CMP-08 has also been extended till July 31, 2022.
June 29, 2022
The 47th GST Council meeting took place in Chandigarh on June 28 and 29, 2022. The meeting's chair, Union FM Nirmala Sitharaman, presented important suggestions for changing prices for goods and services. Additionally, the GST exemption list was condensed, and the public is now invited to offer comments for changes to the GSTR-3B format.
26th May 2022
According to CGST Notification No. 7/2022, issued May 26, 2022, if GSTR-4 for FY 2021–2022 is filed between May 1 and June 30, 2022, the late fee has been eliminated.
Also Read: What is GST? Concept, History, Objectives, Benefits Explained
Conclusion
As you can see, GST is quite flexible because adjustments are made depending on the social and economic climate of the country. It is still improving, and more fine-tuning is needed to build an extremely reliable system.It is expected that the changes that are bought in to the legislation will boost the economy and draw more investments because of the reduced tax rates and generate employment in return.
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