The GST bill, known as the Goods and Services Tax, was introduced in Lok Sabha in December of 2014 and will be implemented from July 1st, 2017.
Under the GST bill, the Indian economy will see an economic integration. One will see all other taxes getting consolidated into one, it will restructure the indirect taxation, making the taxation process humbler. So, instead of paying, Octroi, Central Excise VAT i.e. the value added taxes etc…, including few other indirect taxes, the taxpayers will only pay one amalgamated tax.
The entire endeavour is to avoid double taxation. GST will be charged both, at Central and State levels of government, and to make submissions easier and simpler, steadily the discrepancy between goods and services will be abridged. Many developed countries have introduced such taxations for ease and suitability of the taxpayer.
GST will be on the ‘transaction value’, which in other words essentially means, taxes will be levied on the price actually paid or payable. The transaction value will include all other variables like the packaging cost, commission and all other expenses incurred for sales.
Also, this tax will be paid at the last step, the closing point of consumption. It’s important to note that GST has two constituents, the Central GST and the State GST, thus ensuring that both the governments authorize and manage their respective taxes.
This will, therefore, contribute to making the Indian economy stronger and powerful.
Benefits of the GST Bill
- It makes the transaction more transparent. Enabling sales invoices to show, the tax applied.
- It reduces the cost of doing business, as it eliminates all the hidden charges.
- It will reduce the cost of things, as a result, consumption might increase, helping companies increase their production.
- Currently, the split between taxes for manufacturing and service charge is very complicated. With the application of GST all the taxes will be integrated and perhaps it will become possible to split the manufacturing and services tax burden equally.
- GST is applied at the final point of consumption and not at every step (like the manufacturing and retail outlets) this will help in eliminating misrepresentations and assist in the development of the common national market.
- The tax administration will work corruption free and with transparency.
- Beneficial impact on Centre and State Governments – experts are predicting a $15 billion a year in financial gains post implementing the GST bill. Because it is predicted to create a split of burden between the manufacturing and services/retail in taxes, it will stimulate more exports, in turn creating additional employment opportunities, aiding industrial and economic growth.
Possible Shortcomings of the GST Bill
- Real Estate could have a negative impact, some economist predict that it will add up to 8% to the cost of new homes and reduce demand closely by 12%
- There might be unrest amongst dealers who have been avoiding certain taxes, by only paying VAT, who will now be forced to pay GST.
There is a lot that is predicted by economic pundits, and there is a lot of dust in the air with regards to the immediate and long-term impact of the GST bill. It's only when the dust settles, one will see where we stand.
However, it can be said with surety that there will be a significant amount of transparency and ease in the taxation process for the taxpayer.