hello friends.. sunshine brings for you the most debated topic going on in the Indian Economic scenario the GST.
WHAT IS MEANT BY GOODS AND SERVICES TAX?
One of the biggest tax reforms in India is the proposal of GST. It is set to integrate state economies and boost overall growth. GST will create a single unified Indian market to make the economy stronger. The implementation of GST will lead to abolition of other taxes such as octroi, central Sales tax (CST), state level sales tax, entry tax, s tamp duty, telecom licence duty, turnover tax, tax on consumption or sale of electricity, taxation on transportation of goods and services. There by avoiding multiple layers of taxation that currently exist in India.
ALL ABOUT GST
GST is a comprehensive tax levied on manufacture, sale and consumption of goods and services at national level through a tax credit mechanism. This tax is collected on Value Added Goods and Services at each stage of sale or purchase in the supply chain. The system allows the set of GST paid on the procurement of goods and services against GST which is payable on the supply of goods or services. However the end customer bear this tax as he is the last person in the supply chain.
LONG WAIT FOR GST
After a long wait of 10 years, the Rajya Sabha passed the Goods and Services Tax (GST) which is going to be a reality in 2017. This is the 122nd constitutional amendment and is speculated to be the biggest economic reform in India since liberalisation in 1991.
By when will it be implemented?
Constitution Amendment Bill is not expected to come into force before 1st JULY, 2017. This is beside the fact that states, India Inc, and industries will have to prepare themselves for a completely new tax regime.
How would GST be administered in India?
GST has two components – Central GST (CGST) and State GST (SGST). Both Centre and States will simultaneously levy GST across the value chain. The tax will be levied on every supply of goods and services. Centre would levy and collect Central Goods and Services Tax (CGST), and States would levy and collect the State Goods and Services Tax (SGST) on all transactions within a State. It will be a 4 tier tax base varying from 5% till 28%, namely 5%, 12%, 18% and 28%.
Benefits of GST Bill
Under GST, all the taxes will be integrated, hence, it will be possible to bring a transparency in the levying of taxes and the burden of taxation will be shared equally between manufacturing and services. According to experts, by implementing the GST, India will improve the tax collection by breaking tax barriers between states and integrating India through a uniform tax rate there by gaining $15 billion a year.
The entire Indian market will be a unified market which may translate into lower business costs. It can facilitate seamless movement of goods across states and reduce the transaction costs of businesses. Companies that are under unorganised sector will come under the tax regime which will be levied only at the destination point and not at various points.