I was just asking for my second blog topic and suddenly I got a suggestion from one of my friend asking me to blog on GST. As a student of commerce, I thought of studying the topic and blogging regarding it. And also it is one of the most important Tax reform of India since, 1947.
What Is GST ?
For all those who don’t know about GST let me clear about it first, GST means Goods and Services Tax. This will be levied on manufacture sale and consumption of goods and services.The primary function of the GST is to transform India into a uniform market by breaking the current fiscal barrier between states. Which means a uniform tax rate across India no matter what is the current rate. Currently, the indirect tax system in India is complicated. Taxes levied by Centre and the State separately. Taxes (Currently Prevailing) such as excise duty, service, central sales tax, VAT ( Value Added Tax), entry tax or octroi will all be all under one roof (GST). This tax covers all stages from manufacture to sale. Since, the target of passing this particular bill is already been missed. Government is hopeful that it will be passed in the current winter session. Almost 140 countries have already applied GST. France was the first country to introduce GST system in 1954.
Is it Important?
Since, the multiple tax is very much pinching the pocket and making everyone confuse, GST will be a single Tax which will give clear cut opinion to a common men. Since it is a single tax which will be charged, it will come as positive sign for all the business people as their Accounting complexities will be reduced. And it will also help in increase in competition in business especially for the manufacturer’s and it will save more valuable time and money. Also as per the experts and various economists, GDP of India can also increase by 2% if brought into effect. Right now, the effective tax rate on manufactured goods works out to be approx 20%, while services are taxed at 10.3%. Although the GST rate is not yet decided but many experts forecast it to be 15%. “The strength of the GST lies in avoiding the continuous levying of taxes from producer to consumer,” says West Bengal Finance Minister Asim Dasgupta, who heads the panel of state finance ministers set up to give final shape to the GST. While it benefits to corporates but it is also viewed as a consumer friendly, although it has not been discussed on that way. It is expected that due to positive implication on manufacturer’s prices of good’s are also expected to fall, even though not sharply. Since the picture from the consumer point of view is still not clear. Still due to its uniformity and transparency its a win-lose situation.
The appositeness of GST Bill.
According to Finance Minister Arun Jaitlety, GST bill is important in every stage for boosting the economy and simplifying the indirect tax system in India. Investment also seems to get an upward trend due to uniformity but if thought from consumer point of view still its unclear, therefore their is a lot ridding on the current government to pass the bill. There are still many points which are unclear such as the goods which are to be exempted, commodities to be added, petroleum price issue etc. With the issue being raised in parliament its still wait and watch from economic perspective. The Lok Sabha on Tuesday passed the Constitution amendment bill to roll out the Goods and Services Tax (GST), a day after it was tabled in the house. But still its left to be passed in Rajya Sabha. It the bill is passed in the other house it will be applied from the upcoming Financial Year (1st April,2016).
Thank You for reading the blog.