Want To Know the Tax Difference after GST
10 Oct 2017
The introduction of Goods & Services Tax (GST) since July 1, 2017 has been the biggest tax reform in India since independence. The main objective of GST is to simplify the process and the system of taxation in India and to ensure the compliance of tax payment. This tax is applicable to all the manufacturers, sellers as well as consumers. Let’s take a look at some of the major tax differences that have emerged after the application of Goods and Services Tax.
|SECTOR/INDUSTRY||PERCENTAGE OF TAX (GST)|
|Food grains, and crops (Wheat, rice, maize etc.)||0%|
|Mass consumption products (Oil, tea, coffee, spices etc.)||5%|
|Processed foods (Cheese, convenience foods, bread, etc.)||12%|
|Consumer goods (Tooth paste, smart phones etc.)||18%|
|Luxury Items (cars, aerated beverages, tobacco etc.)||28%|
The General Changes
GST will reduce the loss of revenue that was caused because of VAT. Before GST, states used to reduce VAT rates to attract investors. That would cause losses to the central government. Application of GST will make sure of a robust income for the state as well as central governments.
Ease of Transporting Goods
Transportation of the goods will be easier with the help of GST, because there will be no separate charges across the states. This will not only reduce the cost of transportation, but also make it quicker.
Replace Indirect Taxes
Before GST was introduced, there were a number of taxes which had to be paid, such as, Central Excise, Service tax, Central Sales Tax (CST), Countervailing Duty (CVD) and so on. These taxes made the processes extremely complicated and lengthy.
Prevents Unhealthy Competition
Introduction of GST will prevent unhealthy competition between states. These conflicts occur because of the different and complicated tax structures.
GST is not applicable on the goods and services that are exported out of India. This encourages exports at lower cost, which leads to increase in trades and markets, and also contributes to the hike in the GDP (Gross Domestic Product) of the country.
There has been a marginal increase in the tax rate applicable on insurance after GST. Service tax rate of 15% applicable earlier for the insurance industry has been replaced by GST rate of 18%. At Bharti AXA, we have made our portal GST ready and in a matter of seconds, you can access the Insurance Premium Calculator Online and understand how GST affects your existing policies.
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