DEMONETISATION AND GST @educationforfree

DEMONETISATION AND GST IN INDIA

DEMONETISATION IN INDIA

• On the 8th of November 2016 the Government of India made an announcement with profound implications for the Indian economy.It decided to demonetised high value currency notes of denomination of rupees 500 and 1000 with immediate effect ceasing to be legal tender except for a few specified purposes act of removing a currency unit of its status as legal tender.

• These  notes accounted for almost 86% of the countries cash supply as per the scheme people have to deposit the invalid currency in the banks and restrictions you are also placed on cash withdrawals. In the other words restrictions are placed on the convertibility of domestic money and Bank deposits.

•  The aim of demonetisation was to curb corruption ,counterfeiting the use of denomination notes for illegal activities and especially the accumulation of "Black Money" generated by income that has not been declared to the tax authorities.

• FEATURES OF DEMONETISATION

1. Demonetisation is viewed as a " tax administrative measure". Cash holding arising from declared income was already deposited in bank and exchange for new notes have a work people holding black money have to declare that unaccounted wealth and pay taxes at penalty rate.

2. Demonetisation is also interpret as a shift on the part of government indicating that tax evasion will no longer be tolerated or accepted.

3.  monetization also lead to channelising savings into formal financial system that much of cash deposited in the banking system is bound to be withdrawn but some of new deposit schemes offered by the bank will continue to provide base Loan at lower rates.

4.  Demonetisation also aims to create a less cash or cash lite economy that is channel tunneling more savings through formal financial system and improving tax compliance.

5.  However digital transactions required internet connectivity as they need cell phones for customers and point of sale machines for merchants.

6.  On the contrary, these disadvantages counterbalanced by an understanding that it helps people into the formal economy by increasing financial saving a reducing text equation.

IMPACT OF DEMONETISATION

1.  MONEY OR INTEREST RATES

• decline in cash transactions

• Bank deposit increased

• increase in financial savings

2. PRIVATE WEALTH

• declines in some HIGH DEMONETISED notes were not returned and real estate prices fell

3. DIGITISATION

• transactions amongst new user and use of rupay cards and AADHAR enabled payment system increased.

4. REAL ESTATE

•Prices declined

5. TAX COLLECTION

• rise in income tax collection because of increased disclosure

GOODS AND SERVICES TAX (GST)

 GST on goods and services tax is a comprehensive indirect tax which was replaced by many indirect taxes in India.

The goods and services tax was passed in the Parliament on 29th March 2017 . The act came into effect on 1st July 2017. It is a multistage, destination based tax, that is levied on every value addition .GST has been identified as one of the most important tax reforms post independence.

•  India implemented GST following the credo of one Nation and one tax and wanting a unified market  in order to ensure the smooth flow of goods and services across the country.

• Tax apart from being a source of revenue for growth also plays a key role in making the state accountable to its tax payers effective taxation and shows that public funds are effectively employed in fulfilling social objectives for sustainable development.

•  benefits GST is expected to improve the ease of doing business in tax compliance, reduce tax burden by eliminating tax on tax, improve tax administration, mitigate tax evasion, broaden the organiser comment of economy and boost tax revenues.

•  GST has replaced 17 indirect taxes and 23 cesses of the centre and state their by eliminating the need for filling multiple data and then assignments it has a rationalised the tax treatment of goods and services along the supply chain from producers to consumers.

• GST is charged at each stage of value addition and the supplier of sets the levy on inputs in the stages of value chain through the tax credit mechanism.

•The last  Dealer in the supply chain passes on added GST to the consumer making GST destination based consumption tax.

•  The provision of availing input credit at each stage of value chain helps in avoiding the cascading effect of (tax on Tax) under GST which is expected to reduce prices of commodities and benefits the consumer.

KEY FEATURES OF GST

1. GST is applicable in the whole country

2.  applicable on supply of goods and services

3.  consumption based tax

4.   Services Pvt Ltd at interstate supplies and would be subject to I GST in addition to the applicable customs duties

 5.  cgst sgst and cgst are levied on rate mutually agreed upon by centre and state under aegies of GST Council . There are  four tax slabs 5% 12% 18% and 28% for all goods and services export and supplies to Z 0 rated.

6.  modes of payment of tax available to the taxpayer including Internet Banking debit or credit card and national electronic funds transfer for real time gross settlement.

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Note: The work is collected from various sources and author does not claim over work.