Focus: GS-III Indian Economy
Why in news?
Mobile phones are likely to get costlier, with the Goods and Services Tax (GST) Council on 14th March 2020 deciding to increase the rate on mobile phones and specific parts to 18% from the current 12%, from April 1.
The decision was taken not to increase the prices but to correct the inverted structure of duty on some products wherein the rate of tax paid on inputs purchased is more than the rate of tax on finished products on outward supplies.
What is GST?
Goods and Services Tax (GST) is a comprehensive indirect tax on manufacture, sale, and consumption of goods and services throughout India. GST would replace respective taxes levied by the central and state governments.
- It is a destination-based taxation system.
- It has been established by the 101st Constitutional Amendment Act.
- It is an indirect tax for the whole country on the lines of “One Nation One Tax” to make India a unified market.
- It is a single tax on supply of Goods and Services in its entire product cycle or life cycle i.e. from manufacturer to the consumer.
- It is calculated only in the “Value addition” at any stage of a goods or services.
- The final consumer will pay only his part of the tax and not the entire supply chain which was the case earlier.
- There is a provision of GST Council to decide upon any matter related to GST whose chairman in the finance minister of India.
What is GST Council?
- It is a constitutional body for making recommendations to the Union and State Government on issues related to Goods and Service Tax.
- The GST Council is chaired by the Union Finance Minister and other members are the Union State Minister of Revenue or Finance and Ministers in-charge of Finance or Taxation of all the States.
- It is considered as a federal body where both the centre and the states get due representation.
- As per Article 279A (1) of the amended Constitution, the GST Council has to be constituted by the President within 60 days of the commencement of Article 279A.