A Student’s Guide to GST3 min read

A Student’s Guide to GST3 min read


The GST Constitutional Amendment Bill as passed by the upper house on 3rd of August’16, with all 203 members present voting for it, can be undoubtedly regarded as the biggest taxation reform in the country and at the same time it raises a lot of questions!
Here’s what you as a college student should know about it. 


 India as of now has multiple indirect taxation systems, which means different taxes at different stages in business are raised before any final transaction can enter into with a customer, making taxation system complex, allowing easy tax evasion, double taxation, failure in meeting several requirements of a hell lot of provisions amounting to penalties and putting additional burden on the ultimate consumer.

Presently, a producer has to comply with separate legislations for each duty imposed, separate returns for Excise Duty, Sales Tax (VAT), Central Sale Tax, Service Tax, Customs and the never ending list continues as State governments keep on adding taxes to fill their coffins.

Now here’s what is happening that would enlighten the cause!

Suppose there is an automobile production unit in Punjab which purchases inputs from a dealer in Delhi; imported certain technology from outside India & availed services of experts for assembly line management. And now when it plans to sell it through its exclusive dealer, the inputs purchased from Delhi for which it will not be awarded any tax credit, adding it to the cost straight away. Customs need to be complied with and service tax shall be deposited within the prescribed time limit. (Following TDS and Reverse Charge norms) And how can you forget VAT, state government would not spare you for that. Do remember to follow up with timely returns and attorneys be prepared for any scrutiny as well.

So this complexity of taxes creates a need for a simple tax system in the country.

So here’s the solution-“One Nation, One Tax” as our honourable Finance Minister named it.

GST will be one common tax which’ll replace all different taxes, will be common through out all the states and will make life easier for the consimers and business owners. 

So to whom goes the credit? 

The GST constitutional bill was first tabled by congress in 2012, which had to be taken back after strong opposition from opposing parties. Then it was again put to business by the Modi led BJP government in 2014, and now we have the amended bill 2016. 

With regards to the draft model, GST law issued in public domain in June’16, GST is a destination based tax, location of the final consumer will determine occurrence of tax and title to the tax, containing State GST(SGST), Central GST(CGST), and Inter-State GST(IGST), expected to have flat tax rate. 

The details regarding tax rates, payment of taxes, and filing of return are expected to be notified soon as the government seems committed in implementation w.e.f. 1st April’17.

 As of now, the provisions of reverse charge and TDS would be same, registrations under existing acts would be migrated with additional information demands being raised later on.

The government plans to drive a four wheeler economy by giving a boost to falling public investments, maintaining urban demand, rise in rural demand (with a good monsoon expectation) and increasing exports (through lower cost and ease of business). 

The government has also issued FAQs regarding GST (claps…) and for more info one can easily refer to these here: GST FAQs

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