“Role of GST in augmenting revenue of the government”

Author Name : Hariom Yadav

INTRODUCTION

GST has brought ‘One Nation One Tax’ system in India. GST is destination bases tax that means it is collected from point of consumption and not point of origin like previous taxes. The GST is imposed at every step in the production process, but is meant to be refunded to all parties in the various stages of production other than the final consumer.

Goods and services are divided into 4 different tax slabs for collection of tax -  5%, 12%, 18% and 28% and one slab rate is zero% on articles exempted from GST. However, petroleum products, alcoholic drinks, and electricity are not taxed under GST and instead are taxed separately by the individual state governments, as per the previous tax system. There is a special rate of 0.25% on rough precious and semi-precious stones and 3% on gold.[1] In addition a cess of 22% or other rates on top of 28% GST applies on few items like aerated drinks, luxury cars and tobacco products.[2]Pre-GST, the statutory tax rate for most goods was about 26.5% if we take into average tax rate into consideration, Post-GST, most goods are expected to be in the 18% tax range.