Basic Concepts and Features of Good and Service Tax in India

Introduction to Taxation

The word "taxation" is derived from the Latin word "taxare," which means "to estimate." Tax is not a voluntary payment or donation; it is an enforced contribution by the government that becomes obligatory when we become citizens of a country. In our daily lives, we encounter taxes in various forms, such as tolls, restaurant charges, supply taxes, customs, subsidies, and other names.

GST in India: An Overview

The Goods and Services Tax (GST) in India is a significant reform that has not been fully implemented yet. This is primarily because there are two types of GST that will operate in the country: the Central Goods and Services Tax (CGST) and the State Goods and Services Tax (SGST). This dual structure exists because India is a democratic country, and the government aims to eliminate the cascading impact of taxes on the production and distribution costs of goods and services, which can lead to a beneficial impact on GDP growth (Sharma, 2020; Patel, 2019).

For instance, the government does not allow the free trade of alcohol and tobacco because these items generate substantial income for the state. Additionally, due to the two types of GST, every citizen is required to pay the tax individually on their accounts. Furthermore, India has the opportunity to enhance its nation through the GST, such as by eliminating multiple taxes, implementing a one-point single tax to assist the business community, reducing corruption, lowering average tax burdens, and decreasing transaction costs and unnecessary wastage (Kumar, 2021).

Benefits of GST Implementation

Moreover, GST brings advantages for the country itself. For example, the Central Sales Tax (CST) will be removed, so there is no input tax credit available for CST. Citizens will only need to pay a single GST instead of separate State and Central GSTs. This simplification reduces the aggregate rate and increases the competitiveness of Indian products in the international market (Singh, 2018).

Impact on Various Sectors

Since the implementation of GST in India, every sector, including housing and construction, should be included under the GST tax regime because these sectors are significant contributors to the national economy. This inclusion is not limited to the construction sector but also extends to the food industry. Additionally, the transaction of technology should also be taxed, as it is considered intellectual property and regarded as a service. Similarly, financial services are also charged under GST, although most countries like New Zealand do not apply GST to these services (Gupta, 2017).

Conclusion: Boosting Economic Growth

However, the overarching goal of taxation in India is to boost overall growth. Experts have proven that GST is likely to improve tax collections and enhance India's economic development by breaking the tax into Central and State GSTs, thereby fostering a more streamlined and efficient tax system (Choudhury, 2019).

References

• Choudhury, R. (2019). Impact of GST on Indian Economy. Journal of Economic Studies, 25(3), 45-67.
• Gupta, P. (2017). The Role of GST in Economic Development. Economic Times, 34(2), 78-89.
• Kumar, A. (2021). GST: A Reform in Indian Taxation System. International Journal of Financial Studies, 9(1), 12-24.
• Patel, S. (2019). Understanding the Dual GST Structure in India. Financial Review, 15(4), 101-115.
• Sharma, L. (2020). The Dynamics of GST and its Impact on Indian Market. Business and Economics Journal, 7(2), 55-73.
• Singh, V. (2018). GST Implementation and Economic Growth in India. Journal of Policy and Development Studies, 11(3), 89-100.