Goods and Services Tax (GST) – A new law, a new tax will bring with it new challenges to face.

Goods Services Tax (GST) will be one of the scorching topics for the year which comes in our India, when the GST finally comes into place in 2017 to replace the Services Tax. Many arguments have been made on both side of the political divide but the reality is that GST will be implemented and have a huge impact on how services and goods are being priced.

Let us know about GST in brief



What is GST?

GST which is also known as VAT or the value added tax in many countries is a multi-stage consumption tax on goods and services.

GST is muster on the hoard of goods and services at each notch of the supply chain from the supplier up to the retail period of the trading. Even though GST is obligatory at each level of the supply chain, the tax element does not become part of the cost of the product because GST paid on the business inputs is claimable.Thence, it does not matter how many rungs where a particular good and service goes through the supply chain because the input tax incurred at the previous nod is always deducted by the businesses at the next step in the supply chain.

GST is a broad based consumption tax covering all sectors of the economy i.e. all goods and services made in India including imports except specific goods and services which are categorized under zero rated supply and exempt supply orders as determined by the Minister of Finance and published in the Gazette..

The basic fundamental of GST is its self-policing features which allow the businesses to claim their Input tax credit by way of automatic deduction in their accounting system. This eases the administrative procedures on the part of businesses and the Government. Thus, the Government’s delivery system will be further better.

We need to pay taxes so that the government can finance socio-economic development; which includes providing infrastructure, education, welfare, healthcare, national security etc.

“Over the past few decades, the worldwide drift has been for the introduction of a multi-stage GST system. Today, almost 90% of the world’s populations live in countries with GST, including Indonesia, china and Dubai (coming soon in 2018)


The Goods and Services Tax (GST) should not be turned into a polemic and should be viewed as growth for the nation’s development and administration.

In the viewpoint of Islam, Islam did not forbid any government from collecting tax from the people. Through Islamic references, we will know that there is no lucid warning that bars the government from collecting tax although Islam imposes Zakat to help the poor and needy groups.

“GST is not an matter but it seems that it has been turned into a litigious.

“If we refer to any literature references in Islam, there is no mention that tax cannot be collected.

The Islamic scholars says that “Zakat is a system to provide a safety net for the ‘asnaf’ (needy) while other taxation systems is meant for the public administration,”

Meanwhile, the GST collection has made life even more difficult for the low-income groups.

The consumption tax has added financial pressure for low-income and poor families, it could be considered as forbidden in Islam.

The scholar opinioned that the GST should not be imposed to poor as it is a burden matter to the people.

GST in India

The intrinsic essence for broaching GST is converting India into a peerless market. This might have a positive impact on GDP of India and help to boost the Indian economy.

There is both positive and negative side on GST.


Positive Impact of GST:

  • A fused tax system removing a bundle of indirect taxes.
  • Less tax conformity.
  • Removes cascading effect of taxes.
  • Manufacturing costs will be bargain, hence prices of consumer goods likely to come down.
  • Due to reduced costs some products like cars, some households materials will become cheaper.
  • A unified tax regime will lead to less corruption which will indirectly affect the common man.

thus, this is possible only if the benefit is actually passed on to the consumers.

Negative Impact of GST:

  • Services will become expensive. E.g. Banking, airline etc.
  • Being a new tax, it will take some time for the people to understand its implications.
  • It is easier said than done. There are always some complications attached. It is a swallowing based tax, so in caisson of services the place where service is provided needs to be determined.
  • If actual benefit is not passed to consumer and seller increases his profit margin, the prices of goods can also see a rising trend.

Withal, GST is a long term gimmick and the positive impact shall be seen in the long run only. May be opposite.


Now we have a value-added tax (VAT) system at the central and state levels. But only till the central excise duty and service tax concludes at the Central VAT or CENVAT, which is at the entrepreneurial level. It does not go down to the distribution network. Even manufacturers can not find central taxes such as additional excise duties and other taxes (surcharge).Similarly state VAT sales are limited. Sellers can only subtract taxes from VAT on previous purchases. This does not include many other taxes, such as luxury entertainment taxes, octroi, etc. in the state.

If GST comes into existence, all the central and state taxes and fees for all goods and services will be within the two integrated components: Central GST and State GST.This will make tax breaks on a single network. Under that, only the value added to each value will be taxed. The manufacturer / seller can attach to the Central / State GST in his / her purchases. This means that the end user will have to pay only the GSD with the last business dealer.

Let us hope GST proves to be a game changer in a positive way and proves to be beneficial to the common man.

Sayyed zuhair bin hamid ba alawi


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