GST is an indirect tax for the whole country, it will replace several indirect taxes levied by the Central and State Government. Indirect taxes such as excise duty, custom duty, entertainment tax, luxury tax and so on will be replaced in GST regime. After the implementation of GST, it will make India one unified common market. GST is a single tax on the supply of goods and services, credit of input tax paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. Ultimately, GST will be borne by the final consumer.
Parliament has passed the GST Bill in India and it is going to roll out from 1st July 2017. Goods and Service Tax will be categorized at various rates starting from 0 to 28 per cent. The GST Council Meeting has announced four- tier GST structure which includes 5 per cent, 12 per cent, 18 per cent and 28 per cent, with lower rates for essential items and the highest for luxury and ‘demerit’ goods that would also attract an additional cess.
The GST Council has already announced half of the rules which are required for the implementation of Goods and Service Tax (GST). Jaitley said that the Council has also approved amending the five rules on registration of entities under the GST regime, a filing of returns, payment of tax and refund, invoicing and debit and credit notes in consonance with the GST law approved by Parliament this week.
The Central GST bill, the Integrated GST bill, the Union Territories GST bill and the compensation law, have already been approved by the Lok Sabha on 6th April.
Finance Minister Arun Jaitley has announced the next GST Council meeting date that will be scheduled in Srinagar on 18th and 19 May. At GST Council meeting, all finance ministers state and central will be finalized the rates of different commodities and services. It will also approve rates of the remaining items.
The Benefit of GST can be Summarized Below:
For Business and Industry in India
Easy Compliance
Superior and Comprehensive IT system would be the foundation of the GST regime in India, all taxpayer services would be available to the taxpayers online which will make compliance easy and transparent.
Uniformity of tax rates and structures
GST will ensure indirect tax rates and structures to be common across the country thereby increasing the certainty and ease of doing business.
Removal of Cascading Effect
A system which provides tax credit throughout the value chain, across the boundaries of states which in turn minimize the cascading of taxes.
Improved Competitiveness
Reduction in transaction cost and hidden cost of doing business would eventually lead to an improved competitiveness for the trade and industry.
Gain to Manufacturers and Exporters
The subsuming of major central and state taxes in GST and set-off of input goods and services would reduce the cost of locally manufactured goods and services, this will increase the competitiveness of Indian goods and services in International market and give a boost to Indian exports.
Attract Foreign Investors
After GST implementation, one unified tax rate prevails which makes easy tax calculation and lower down the administration cost which helps in attracting the foreign investors.
For Central and State Government
Simple and Easy to administer
Multiple indirect taxes at the Central and State levels are being replaced by GST which makes it easier to administer than all the other indirect taxes of the Centre and State levied so far.
Better controls on Leakage
GST will result in better tax compliance as there is an in-built mechanism in its design that would incentivize tax compliance by traders.
Higher revenue Efficiency
GST is expected to decrease the cost of collection of tax revenues of the Government which leads to higher revenue efficiency.
Black Money Erosion
GST platform provides transparency in set-off of input tax credit and everything will be online which helps in decreasing the scope for the black money.
For the Consumer
Single and Transparent Tax
Under GST regime there would be only one tax from the manufacturer to the consumer, leading to transparency of taxes paid to the final consumer.
Relief in overall tax burden
The overall tax burden on most of the commodities will come down because of efficiency gains and prevention of leakages, which will benefit the consumers.
Inflation rate
GST consists of the single unified rate which is expected to be lower than that of an aggregate of various indirect tax rates, which in turn helps in cutting down the cost of goods and services.
Emerging Issues of GST in Current Scenario
As of now, the GST council has met for 13 times and has given concerns over various laws necessary to implement the GST. All the rules have been passed with the consent of the states and union government. Now there is only a tax rate fixation on goods and services issue, which is held in between asking for solution at the earliest.
Upcoming tax rate finalization will still demand for resolution in certain issues like place of supply regulation for the service sector and its action over inter-state or intrastate basis will further clarify the levy of Integrated GST applicability. While the issue of destination and origin is also persistent as the destination of a goods and service rendered and the origin of bill has been sorted by various industrial associations for the clarity.
The e-way bill also demanded some resolution as the new electronic bill variant of the transportation sector is making issue in concern of recipients usually denying the e-way bills making the transaction incomplete. As of now, the rates are not on the verge to be publicized as the softwares just need to be feeded with the numbers demanding no changes in the coding.
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