This new tax has had the biggest impact on SMBs. It was implemented in 2017 and replaced the existing system of multiple taxation levied by the state and central governments. Geared to simplify the then-existing taxing system, the GST consists of regulations, rules and taxes managed by a GST Council. Before the implementation of GST, the tax rate on many goods was set at a standard 26.5%. After the implementation of GST, the tax rate for most goods falls within 18%. There are currently five tax slabs – starting at 0%, then 5%, moving up to 12% and 18% and then finally 28%.
Before the GST came to be implemented, buyers had to pay luxury tax, purchase tax, service tax, VAT, central sales tax, customer duty etc. alongside GST. Many of these individual taxes have now been placed under one single tax. This simplified the ‘tax upon tax’ complications that had in the past frustrated many small business owners. As of date, the new GST tax brackets are planned as follows: