Goods and Service Tax (India)

Current Affair For GDPI - Goods and Service Tax (India)

Goods and Service Tax (India)

Goods and Service Tax (India)

Current Affair For GDPI - Goods and Service Tax (India)

 

As we all know that in India there are many direct and indirect taxes, so the Government of India has proposed the GST Bill which will be a standard tax across India. This topic is important for your General knowledge   as well as for your group discussion and personal interview. So let us have a brief overview of what GST is all about

Introduction

The Goods and Services Tax Bill or GST Bill, also known as The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014, proposes a national Value added Tax to be implemented in India from April 2016.

“Goods and Services Tax” would be an indirect tax on manufacture, sale and consumption of goods and services throughout India, which will replace taxes levied by the Central and State governments.

The introduction of Goods and Services Tax (GST) would be a significant step in the reform of indirect taxation in India. Amalgamating several Central and State taxes into a single tax would mitigate cascading or double taxation, facilitating a common national market. The simplicity of the tax should lead to easier administration and enforcement. From the consumer point of view, the biggest advantage would be in terms of a reduction in the overall tax burden on goods, which is estimated at 25%-30%.

As India is a federal republic GST would be implemented concurrently by the central government and by state governments.

Salient features of GST Bill

  • GST, or Goods and Services Tax, will subsume central indirect taxes like excise duty, countervailing duty and service tax, as also state levies like value added tax, octroi and entry tax, luxury tax.
  • The final consumer will bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages
  • As a measure of support for the states, petroleum products, alcohol for human consumption and tobacco have been kept out of the purview of the GST.
  • It will have two components – Central GST levied by the Centre and State GST levied by the states.
  • The GST Council will consist of the union finance minister as chairman, the union minister of state of finance and the finance minister of each state.
  • The bill proposes an additional tax not exceeding 1% on inter-state trade in goods, to be levied and collected by the Centre to compensate the states for two years, or as recommended by the GST Council, for losses resulting from implementing the GST.

Benefits of GST Bill

For the Centre and the States

By implementing the GST, India will gain $15 billion a year. This is because , it will promote more exports, create more employment opportunities and boost growth. It will divide the burden of tax between manufacturing and services.

For individuals and companies

In the GST system, taxes for both Centre and State will be collected at the point of sale. Both will be charged on the manufacturing cost. Individuals will be benefited by this as prices are likely to come down and lower prices mean more consumption, and more consumption means more production, thereby helping in the growth of the companies.

Bottlenecks in the implementation of GST

Though the Government wants the GST Bill to be implemented by April 2016, there are certain bottlenecks which need to be taken care of before that:

  • What preparations are needed at the level of Central and State Governments for implementing the GST?
  • Whether the Government machinery is efficient enough for such an enormous change?
  • Whether the tax-payers are ready for such a change?
  • What will be the impact on the Government’s revenue?
  • How will the manufacturers, traders and ultimate consumers be affected?
  • Will GST help the small entrepreneurs and small traders?

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