History of GST. A Brief History of GST in India and also GST History around the World

Updated: Dec 20,2019 11:52 IST

History of GST. A Brief History of GST in India and also GST History around the World
History of GST has begun in India started before two decades and was made successful in the year 2017. History of GST will help you under the benefits of Goods and Services Taxes and the advantages over other type of taxes. History of GST given in different stages, its transformation from other tax types, and more informative data on GST are given in the article.

An Introduction on History of GST

GST or Goods and Services Tax came into use from July 1, 2017 replacing number of other taxes that was applied till June 30, 2018. The discussions of GST Bill has been in process process for more than two decades and the bill was passed to implement GST from July 1, 2017 by the Prime Minister of India and his Finance Minister Arun Jaitley. GST was launched on the midnight of July 1, 2017. The single GST replaced several taxes and levies which included: central excise duty, services tax, additional customs duty, surcharges, state-level value added tax and Octroi. We follow the dual GST system i.e. GST for State and Central named SGST and CGST, respectively. Let us have an overview on the history of GST from the content below as an eye-opener.

Overview on History of GST

  • 2006 - First announcement of GST was made by the Union Minister during the 2006-2007 budget, that it would be introduced on April 1, 2010.
  • 2009 - Empowered Committee released the first Discussion Paper.
  • 2011 - 115th Amendment Bill was introduced and subsequently lapsed
  • 2014 - 122nd Amendment Bill was introduced in Lok Sabha
  • August 2016 - One Hundred and First Amendment Act was enacted
  • September 2016 - The first GST Council Meeting was conducted
  • March 2017 - CGST, SGST, IGST, UTGST and Compensation Cess Act was recommended by GST Council.
  • April 2017 - CGST, SGST, IGST, UTGST and Compensation Cess Act were passed
  • 1 July 2017 - GST laws, Goods and Services Tax was launched all over India.
  • 7 July 2017 - Jammu and Kashmir state legislature passed its GST

What were the Taxes available Before the Implementation of GST? 

State Value Added Tax (VAT), Central Excise Tax, Services Tax,  Central Sales Tax, etc are all replaced by the single entity called GST (Goods and Services Tax). Value Added Tax was mainly for the taxes at State level across all states in India. Now on introduction of GST, VAT is replaced by State GST or SGST and the State VAT department will be simply converted to SGST Departments. More details on SGST are given below. Similarly, Central Excise Tax that is the central tax for the goods and services are now replaced with Central GST or CGST. More details given under respective heading below.

What was the GST Rates as on July 1, 2017?

As said in the Introduction, GST was implemented in the year 2017 on July 1st. When Gst was first introduced, the charges were broadly divided for State and Central GST. When compared to the earlier taxing system, newly introduced GST rates were higher. When GST was first introduced it had five tax slabs and the goods and services were spread across these tax slabs. This GST rates were followed till an amendment to lower the GST rates on selected goods and services were made on 18th January 2018 at 25th GST Council Meet. After which amendments were made on 29 Goods and 53 Services which came to effect from 25 January 2018. GST rates major goods till January 25, 2018 are listed below.
 

0% GST Rate

fresh meat, fish chicken, Eggs, Milk, butter milk, Curd, natural honey, fresh fruits and vegetables, flour, besan, bread, prasad, Salt, Bindi Sindoor, Stamps, judicial papers, printed books, Newspapers, Bangles, handloom etc.

5% GST Rate

Fish fillet, Cream, skimmed milk powder, branded paneer, frozen vegetables, Coffee, Tea, Spices, pizza bread, Rusk, Sabudana, Kerosene, Coal, Medicines, Stent, lifeboats

12% GST Rate

Frozen meat products, Butter, Cheese, Ghee, dry fruits in packaged form, animal fat, Sausage, fruit juices, Bhutia, Namkeen, Ayurvedic medicines, tooth powder, Agarbatti, colouring books, picture books, Umbrella, sewing machine, and cellphones

18% GST Rate

Flavoured refined sugar, Pasta, Cornflakes, pastries and cakes, preserved vegetables, jams, sauces, Soups, ice cream, instant food mixes, mineral water, Tissues, Envelopes, Tampons, notebooks, steel products, printed circuits, Camera, speakers and monitors.

28% GST Rate

Chewing gum, Molasses, chocolate not containing cocoa, waffles and wafers coated with chocolate, pan masala, aerated water, Paint, Deodorants, shaving creams, after shave, hair shampoo, Dye, Sunscreen, Wallpaper, ceramic tiles, water heater, Dishwasher, weighing machine, washing machine, ATM, vending machines, vacuum cleaner, Shavers, hair clippers, Automobiles, Motorcycles, aircraft for personal use, and yachts

What are the Revised GST Rates that was Effective From January 25, 2018?

With the introduction of GST in July 2017, the tax rates on most on the basic commodities also remained high. But on the 25th GST Council Meet it was proposed to reduce the GST rates on selected goods and services. Based on this, GST Rates were revised on January 18, 2018 and the revised GST rates for both Central and State Came into effect on January 25, 2018. The rate were revised on 29 Goods and 53 Services. GST Rates were revised from 28% to 18%, 28% to 12%, 18% to 12%, 18% to 5% and few were charged NIL GST and for very few products there was raise in GST Rates.
 

Goods taxed at 0%

Vibhuti, De-oiled rice bran and parts used to manufacture hearing aids

Reduced from 28% to 18%

Old and used motor vehicles [medium and large cars and SUVs] with a condition that No ITC is availed, Public transport Buses that run on Biofuel

Reduced from 28% to 12%

For Old and used motor vehicles [other than medium and large cars and SUVs] with a condition that No ITC is availed

Reduced from 18% to 12%

Sugar boiled Confectionery, Drinking water, packed in 20 litres bottles, Biodiesel, Drip irrigation system including laterals, sprinklers, Mechanical Sprayer, Certain listed Bio-pesticides (12 in nos), Fertilizer grade Phosphoric acid, Bamboo wood building joinery

Reduced from 18% to 5%

LPG supplied to  Household Domestic Consumers, Raw materials and Consumables needed for Launch vehicles, Satellites and Payloads (Both CGST and IGST Rates), Tamarind Kernel Powder, Mehendi paste in cones

Reduced from 12% to 5%

Articles of straw, of esparto or of other plaiting materials, Velvet fabric [with a condition that no refund is claimed on ITC]

Reduced from 3% to 0.25%

Diamonds and precious stones

Rate Increased - 0% to 5%

Rice bran (other than de-oiled rice bran)

Rate Increased - 12% to 18%

Cigarette filter rods

History of GST Based on Country

  • France - The first country to implement GST in 1954 and many other European countries introduced GST in 1970-80s.
  • China - Introduced VAT in 2016 to replace the Business Tax System that was already existing. GST is applied on selected goods.
  • Japan - It introduced GST in the name of Consumption Tax in the year 1989.
  • Malaysia - Introduced GST in 2015
  • Australia - GST was introduced in 2000 with the rate of 10% and with the plans to increase it to 15%.
  • Singapore - Introduced GST in the year 1994.
  • Canada - GST was introduced in 1991 and has a dual model like India i.e. State GST and Central GST. 

What is GSTN?

GSTN stands for Goods and Services Tax Network. It was introduced by the Government as a private company in 2013. It was registered under the Companies Act 1956, under Section 25. The main purpose of GSTN is to provide front-end services of registration, returns to taxpayers and payment. It also has the duty to develop back-end technical modules which will used by the states that had opted. Nearly 34 IT and Financial technology companies are chosen and named as GST Suvidha Providers to develop applications that will be accessed by taxpayers to interact with GSTN. These applications are very useful for the taxpayers as well as the government.

What are the Benefits of Introduction of GST?

With the introduction of GST, there are various benefits globally. The main motive is to maintain a uniform tax and develop the country’s products and introduce it globally. Some of the benefits of GST are listed below.
  • GST creates common market nationally. 
  • Attracts foreign investment.
  • Helps to have uniform taxation.
  • Helps improve production and encourage to enter international market.
  • Small retailers have nil tax or low tax.
  • Consumers are benefited by purchasing from the small retailers.

What are the Features of GST?

GST implementation has brought a major change in the economy of India. It has widen up the markets of the goods and services due to uniformity of taxation throughout the country. Some of the features of GST are listed below.
  • GST is applied on the supply of the goods unlike the earlier form of earlier taxation.
  • GST is destination based structure of taxing.
  • It is charged as CGST, SGST and IGST.

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