Focus: GS II- Indian Economy
Why in News?
Customers will have to pay a 5% Goods and Services Tax (GST) on pre-packed, labelled food items such as atta, paneer and curd, besides hospital rooms with rents above ₹5,000.
What is GST?
- GST is a destination-based indirect tax and is levied at the final consumption point.
- Under it, the final consumer of the goods and services bear the tax charged in the supply chain.
- GST is a transparent and fair system that prevents black money and corruption and promotes new governance culture.
GST Act
- Goods and Services Tax (GST) Act came into effect in 2017.
- Goods and Services Tax (GST) was introduced by the Government of India to boost the economic growth of India. GST is considered to be the biggest taxation reform in the history of the Indian economy.
- The power to make any changes in the GST law is in the hands of the GST Council. GST Council is headed by the Finance Minister. One hundred and first amendment act, 2016 introduced the GST in India in July 2017.
What are GST Slabs?
- Over 1300 items and over 500 services are included in India’s 4 main GST slabs.
- There are five general tax rates: 0%, 5%, 12%, 18%, and 28 %; in addition, a cess is imposed on select “sin” commodities in addition to the 28 % tax.
- The GST Council reviews the products included in each slab rate on a regular basis to make adjustments for changes in market conditions and business needs.
- The revised structure makes sure that necessities are subject to lower tax categories and that luxury goods and services are subject to higher GST rates.
- Demerit goods, including alcoholic beverages, cars, and tobacco products, are taxed at a rate of 28 percent plus an additional GST compensation
