HOW IMPORTANT IS GST CONSULTANT FOR BCOM AND MBA STUDENTS?
WHAT IS GST? GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. In simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply of goods and services. This law has replaced many indirect tax laws that previously existed in India. GST is one indirect tax for the entire country. So, before Goods and Service Tax, the pattern of tax levy was as follows: Under the GST regime, the tax will be levied at every point of sale. In the case of intra-state sales, Central GST and State GST will be charged. Inter-state sales will be chargeable to Integrated GST. Goods and Services Tax (GST) is India’s most ambitious indirect tax reform plan, which aims to stitch together a common market by dismantling fiscal barriers between states. It will be a single national uniform tax levied across India on all goods and services. It will replace all the indirect taxes levied on goods and services by the Indian Central and State governments. It is aimed at being comprehensive for most goods and services. India is a federal republic, and the GST will thus be implemented concurrently by the central and state governments as the Central GST and the State GST respectively. It is considered to be a major improvement over the pre-existing central excise duty at the national level and the sales tax system at the state level. The GST journey began in the year 2000 when a committee was set up to draft law. It took 17 years from then for the Law to evolve. In 2017 the GST Bill was passed in the LokSabha and RajyaSabha. On 1st July 2017, the GST Law came into force. Components of GST There are 3 taxes applicable under this system: CGST, SGST & IGST. CGST: Collected by the Central Government on an intra-state sale (Eg: Within Maharashtra) SGST: Collected by the State Government on an intra-state sale (Eg: Within Maharashtra) IGST: Collected by the Central Government for inter-state sale (Eg: Maharashtra to Tamil Nadu) transaction New regime Old regime Sale within state CGST + SGST VAT + Central Excise/Service tax Revenue will be shared equally between the Centre and the State Sale to another state IGST Central Sales Tax + Excise/Service Tax There will only be one type of tax (central) in case of inter-state sales. The Center will then share the IGST revenue based on the destination of goods. Tax laws before GST In the earlier indirect tax regime, there were many indirect taxes levied by both state and center. States mainly collected taxes in the form of Value Added Tax (VAT). Every state had a different set of rules and regulations. Interstate sale of goods was taxed by the Center. CST (Central State Tax) was applicable in case of interstate sale of goods. Other than above there were many indirect taxes like entertainment tax, octroi and local tax that was levied by state and center. This has lead to a lot of overlapping of taxes levied by both state and center. For example, when goods were manufactured and sold Excise Duty charged by the center was charged by the center. Over and above Excise Duty, VAT was also charged by the State. This has lead to a tax on tax also known as cascading effect of taxes. The following is the list of indirect taxes in the pre-GST regime: Central Excise Duty Duties of Excise Additional Duties of Excise Additional Duties of Customs Special Additional Duty of Customs Cess State VAT Central Sales Tax Purchase Tax Luxury Tax Entertainment Tax Entry Tax Taxes on advertisements Taxes on lotteries, betting, and gambling CGST, SGST, and IGST have replaced all the above taxes. However, the changeability of CST for Inter-state purchase at a concessional rate of 2%, by issue and utilization of c-Form is still prevalent for certain Non-GST goods such as: (i) Petroleum crude; (ii) High-speed diesel; (iii) Motor spirit (commonly known as petrol); (iv) Natural gas; (v) Aviation turbine fuel; and (vi) Alcoholic liquor for human consumption. in respect of following transactions only: Resale Use in manufacturing or processing Use in the telecommunication network or in mining or in the generation or distribution of electricity or any other power. Impact of GST on students Impact on school students: The government has exempted both the government and private institutions providing education up till higher secondary. The preschools are also exempted. The extra activities and amenities provided by the school are going to attract high tax rates. The stationery products like notebooks and exercise book will be at 12%, and the other items like pen and school bags will be taxable at 18%. Impact on college students: Application of GST has increased the tax by 3%, earlier it was 15%, and now it has reached 18%. The third party services that an Institute needs like a canteen, transportation, housekeeping and security are now taxable at a rate of 18%. The increase in these costs for the institution will ultimately affect the students. The services provided by IIM are exempted from GST, except the executive course. The non-conventional courses are affected by GST taxation; there is a 3% hike. Impact on coaching and other competitive exams: Coaching sector is a huge segment of the education industry. More and more students enrol in the coaching classes each year to fight competitive exams. Previously it was taxable at 15%, which is now increased to 18%. For example, if your coaching fee was 2 lakh, previously you had to pay 2 lakh 15 thousand, but now you need to pay 2 lakh 18 thousand. There is a possibility of an increase in the cost of competitive exam forms. Impact on other services: All the vocational training and skill development services provided under government schemes are kept tax free. There is no direct rise in the interest rate of education loan, but there is some increase in service tax levied by the bank. The workshops, seminars or training conducted by any foreign organization for educational purposes, will come under GST taxation. Education is the foundation for any Nation’s growth and development. Education is a basic necessity and not a luxury. The education sector was in the negative list before GST, making it more accessible for the common man. The government is claiming that the education cost won’t increase due to GST. It is too soon to make a judgment on the overall impact of GST on the students. But there is surely a certain amount of increase in the cost of higher education. How much it will affect the students, only time can tell. Advantages of GST GST will mainly remove the Cascading effect on the sale of goods and services. Removal of cascading effect will directly impact the cost of goods. Since tax on tax is eliminated in this regime, the cost of goods decreases. GST is also mainly technologically driven. All activities like registration, return filing, application for refund and response to notice needs to be done online on the GST Portal. This will speed up the processes.