Author: Arun Raghav
GST or the Goods and Services Tax is a proposed system of indirect taxation in India which is brought to dissolve all other existing taxes into a single common taxation system for the whole country. This terminology gained much importance and public attention after the emergence of NDA (National Democratic Alliance) government at the centre under the leadership of Prime Minister, Shri Narendra Modi.
Evolution of the GST bill through the years
GST may have grabbed the headlines and the front page of various newspapers in the recent times but this is not the new issue and the demand for the same was realised in the year 1986. The concept was brought into light by Vishwanath Pratap Singh with the introduction of Modified Value Added Tax (MODVAT).
This single tax is aimed at subsuming various other existing indirect taxes like central excise duty, services tax, additional customs duty, surcharges, state-level value added tax (VAT) and other such taxes. GST is hailed as a remarkable tax regime as it would eliminate the various inter-state transportation levies on goods entering from one state to another.
The present GST Bill 2017 comprising of four crucial bills was passed by the Lok Sabha on 29th March, 2017 paving the way for the quick implementation of the GST as per the expected deadline of 1st July, 2017. The four bills related to the indirect taxation system are Central GST, Integrated GST, Union Territories GST and GST Compensation bills that were presented to the Indian Parliament by Union Finance Minister, Mr. Arun Jaitley for the legislative approval. All the four bills were passed successfully by voice vote after the nine hours of intense debate.
What does the passage of GST Bill mean for India?
As, the remarkable bills have been passed, here are the few important things that need to be understood with this mega economic reform that is going to change the face of Indian economy. Let us throw light on the several pros and cons of this new taxation legislation.
Pros of the GST- Some of the benefits or pros of the legislation are as follows:
- A simple, single indirect taxation system for goods and services
- Smooth and hassle free business environment
- Major boost to the GDP figures by around 2 â€“ 2.5 percentage
- Uniform Tax rate over the entire nation making it a single market
- Helps in improving the tax payers base and increase in countryâ€™s exports
- Beneficial for manufacturing and corporate sectors due to reduced production cost and average taxes
- Increased consumer spending and less tax burden
- Reduction in the multiple paperwork and time
- Control on the inflation due to the lower prices of manufactured goods
Cons of the GST- Here are the few cons or expected negative impact of this economic reform in the form of GST which is explained below:
- Certain services are going to be charged at a higher price
- There will be initial problems in the swift implementation of the GST on the corporate level
- Expertise of the IT officials are required to deal with the changed taxation system and on the new software
- Initial risk of inflation is expected with this mega transformation
- Petroleum products and real estate sector is currently outside the ambit of GST Bill
- According to some experts, the proposed GST will require businesses to get separate registrations for different states
The clear picture about GST will be available once it is rolled out according to the scheduled deadline of 1st July, 2017. People may still have certain reservations about this indirect taxation system but it is one of the biggest economic reform in India since Independence. Stay tuned for more important updates and information about GST.