GST – An analysis



For the past 6 months we have been hearing these 3 words GST a lot. So what’s GST? GST is nothing but GOODS AND SERVICES TAX. It is one indirect tax for the whole nation which will make India one unified market. Goods are the things or products we buy from retailers and Services are the services being provided by the retailers



Before GST we had the following taxes at Central Level:

  • Central Excise Duty
  • Additional Excise Duty
  • Service Tax
  • Additional Customs Duty commonly known as Countervailing Duty and
  • Special Additional Duty of Customs


And we had the following taxes at State Level:

  • State Value added tax or Sales Tax
  • Entertainment Tax
  • Octroi and Entry Tax
  • Purchase Tax and
  • Luxury Tax



All the above central and state taxes have now been subsumed into GST.

GST is split into 3 parts namely-
CGST- Central GST
IGST- Integrated GST


Both Centre and States will simultaneously levy GST across value chains. Centre would levy and collect CGST and the State would levy and collect SGST within a State. In the case of Inter State Transactions, the centre would levy and collect the IGST on all Inter-State supplies of goods and services.


The rates of GST has been split into 5 slabs as below-
5%:- It will be levied on essential foods items and goods that are commonly used. This will include the goods are the most used by people.
12%:- It is a standard slab rate.
18%:- The goods that are not included in the above rates will be taxed at 18% slab rate.
28%:- This rate will be levied on luxurious goods. This will include car, washing machine, air conditioner, etc.
Zero rate GST will be applicable for the 50% of goods falling under consumer price index. This will also include foods grains. Further, the central government has given power to state government to levy 2% extra or lower tax over and above the rate of SGST.



GST has benefitted the common man and the businessman in the following ways-

  •  Increase in the employment opportunities due to the estimated rise in the GDP in the upcoming financial quarters as estimated by IMF and World Bank.
  • Reduction of taxes due to elimination of taxes due to cascading effect or double taxation
  • Development of ONE NATION ONE TAX which will play an important role in the unification of the country as a single market
  • Simpler tax regime due to ONE TAX LAW for All India Level
  • GSTN helps in clean and a transparent taxation system
  • IGST will play a major role in ease of transportation of goods across 2 states which earlier required a lot of bribery and corruption at state borders



Many people argue about why ALCOHOL is not included under GST? The taxes collected from the sales of alcohol contribute to a large part of the revenue of the state government. Present tax on alcohol is somewhere from 56% to 75%. If it is brought under GST and capped under 28% slab the prices of Alcohol will crash by a huge margin causing increase in intake among the people.


Another question in limelight is “How is Singapore able to provide free medical care with 7% GST whereas India is unable to provide it with 28% GST?”
First of all, Healthcare is not free in Singapore. It is one of the most expensive cities in the world. For the poor in India we give subsidized schooling, fertilizers, roads, water, dams, LPG, electricity, water, MSP on crops and many more that Singapore does not give. Also education and healthcare is practically free in India. Also 35% of Singapore’s population pays Income Tax whereas only 1.5% of India’s population pay Income Tax. Comparison is logical if it is made between equals.



A few links related to my article because at the end of the day facts work not punch dialogues- have-positive- impact-on- indian-economy-world- bank.html indias-ranking- in-ease- of-doing- business-bankers/article9936063.ece of-gst- for-now- but-beer- will-still- get-costlier/articleshow/58818443.cms are-over-for-indian-economy-2435941.html


Written by Naveen Bohra, third year, Mechanical Engineering.

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