What are the special features of GST?(any six points)
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Answer:
1. Single Indirect Tax
GST has been introduced as a single, unified tax reform. It has eliminated many existing indirect centre and state taxes like Central Value Added Tax, Special Additional Duty of Customs, Service Tax, and VAT and converted them into a single tax. The elimination of these indirect taxes has not only made tax compliance easier for businesses but has also helped in making many of the goods and services more affordable for the
2.Input Tax Credit System
One of the most prominent GST features in India is the input tax credit. If a manufacturer or service provider has already paid input tax on a purchase, the same can be deducted from their total output tax liability. The input and output invoices need to match to take advantage of the tax credit. This helps in removing the cascading tax effect or the traditional ‘tax-on-tax’ regime. Moreover, it also helps in reducing tax evasion.
3. GST Composition Scheme
SMEs with an annual turnover of up to Rs. 1 crore or Rs. 75 lakhs in specified states can also voluntarily opt for the composition scheme. With this scheme, the businesses can pay a fixed GST rate of 1% on their turnover. However, such businesses can then not use the input tax credit benefit. A business needs to select between whether they want to use the composition scheme or the input tax credit feature.
4. Four-Tier Tax Structure
GST has a 4-tier tax structure of 5%, 12%, 18%, and 28%. All the goods and services can only be taxed as per this tax structure. Many of the essential commodities such as food items do not have any GST. Improved transparency and cheaper goods and services are two of the biggest advantages of this 4-tier structure.
- I only now four features