Nowadays there are so many things heard about GST; little right and many wrong. GST, is like a book which has been hardly read but everybody is giving opinion about it. Here, we have tried to explain the GST in the most unusual, simple and interesting way for a common man.
GST stands for “Goods and Services Tax“, and is proposed to be a comprehensive indirect tax levied on manufacturing, sale and consumption of goods as well as services at the national level. It will replace all other indirect taxes levied on goods and services by the Indian Central and State governments.
To understand it, let’s assume there is a kid, named – Pintu. Now, Pintu studies in the 2nd standard and has a little understanding of societal norms. One fine day there is Pintu’s birthday and he very enthusiastically asking his father to get him the chocolates to distribute among his school friends. His father does so happily.
Now, when Pintu is about to leave school, his classmate Pinku living in the neighborhood wishes him the happy birthday. Delighted Pintu gives two chocolates to Pinku being obliged for being wished. Hearing this conversation, Pinku’s mother also wishes Pintu and Pintu had to give her two chocolates too. Now, Pintu’s father drops him at the school gate and wishes him again by promising to come early to pick him up. The school watchman listens to it and as a courtesy he also wishes Pintu a happy birthday which Pintu had to express his thanks through two chocolates again.
After reaching to class, Pintu’s class teacher announces about his birthday and encourages Pintu to distribute chocolates along with asking few chocolates for Principal of the school. While distributing chocolates, Pintu comes in front of Pinku who has already been given two chocolates but here the courteous Pintu gives him one more chocolate just let Pinku not feel deprive. Moreover, Pintu also finds that his best friend Bablu is absent today (so two chocolates for Bablu is been kept separately). At the end, teacher realizes that Pintu is left with two more chocolates which teacher asks for her son. Poor Pintu give them away with a liability to give chocolates to Bablu the next day.
Now, looking to this entire situation, symbolically if we see, Pintu is a common man; birthday is any service or products on which common man has to pay several taxes. Pinku and her mother are local taxes, school watchman is an entry tax, teacher & all other students are various statutory compliances; School principal is a central tax and Bablu is a liability; where in chocolate for teacher’s son is corruption. So our current tax structure is like that where poor Pintu (a common man) is pissed of paying various taxes at various levels and depriving of getting so many benefits he is supposed to get.
Now, suppose in school there would be a rule that whoever child is having a birthday has to give all chocolates to principal compulsorily and the principal is supposed to distribute chocolates to all students & others (specially the classmates or the same division from where the birthday boy belongs and not to others) rationally then Pintu might have saved from distributing chocolates to same persons again and again. So this system is GST.
Some people are opposing GST because after applying this law there are many Pinkus, Pinkus’ mothers, school watchmen and teachers whose benefits (chocolates) are at stake that is why they are making this much noise and creating chaos.
So awake, be rationale and help Pintu (yourself) to save from multi layer mugging called taxation.
Advantages Of GST
- GST will reduce numbers of indirect taxes. With GST the customer will be able to find out exactly how much tax is being paid on a product or service.
- Under GST the obligation of tax will be divided equally between the manufacturers and services providers.
- In GST system prices of some manufactured goods and services will go down which in turn will bring down the inflation and benefit the middle class.
- Business will become easier as all the other indirect taxes like Octroi, central sales tax, entry tax, state sales tax, license fees, turnover tax will clubbed in single GST tax. In GST there will be no hidden taxes and costs involve in doing Business. Hence, GST will bring transparency in all taxes.
- It will promote exports of the country that will not only boost economic growth but also generate employment.
- It is predicted that GST will also indirectly increase the country’s GDP.
With advantages, GST also has some disadvantages, as follows:
Disadvantages of GST
- It may disappoint people who want to purchase new homes as GST can add up to 7 percent to the cost of new homes. This may thus impact negatively on real estate industry as the demand of consumers may decrease.
- There is no direct monetary tax benefit by GST. GST is nothing new, just a new name for various old taxes collected as one.
- Since the mechanism is still complicated, it cannot completely eliminate black money and tax evasion.
Introduction of GST would also make Indian products competitive in the domestic and international markets. Last but not the least, this tax, because of its transparent character, would be easier to administer. However, once implemented, the system holds great promise in terms of sustaining growth for the Indian economy.