All you wanted to know about Goods and Services Tax !
For many months now, the GST Bill has been an incendiary issue in the Parliament with the ruling administration positioning it as a big reform, while the Opposition is insistent on ironing out glitches. The Bill has edged a few steps closer to passage lately. So here’s how it impacts you.
What is it?
The Goods and Services tax is an indirect tax to be levied when a consumer buys a good or a service. It is intended to replace all indirect taxes that you currently pay. Today, apart from the central excise duty or service tax, there are indirect taxes levied at multiple points on every product or service — be it VAT/sales tax, octroi, luxury tax — which all add up to pinch your pocket.
If the GST Bill becomes law, all the above taxes would now be subsumed under a single GST tax rate. While the final rate is yet to be decided, it is expected to be in the range of 15-18 per cent. In order to bring in GST, a constitutional amendment is needed — with approvals from both the houses of Parliament. The GST Constitutional Amendment Bill, which incorporates the provisions of the GST, was passed in the Lok Sabha last May and is pending approval from the Rajya Sabha. After many a push and pull from the Opposition, the elder’s approval might finally be at hand. It is likely the deadline for the roll out of GST would be April 1, 2017.
Why is it important?
GST is expected to help in a seamless flow of goods and services, unifying India into a single national market. This can improve ‘ease of doing’ business. The current taxation structure has created compartmentalization of markets due to many inter-State taxes which didn’t qualify for credits. GST might simplify the taxation structure and remove distortions in allocation of resources.
Finance minister Arun Jaitley has said that having a one-nation-one-tax regime would provide a congenial business environment. He expects India’s GDP growth rate to be boosted by 1-2 per cent over the long-term due to GST.
Why should I care?
Many of your purchases, including groceries, may get cheaper. Assume you are customer staying in Mumbai, buying Apples from Shimla. They currently cost ₹100 a kg. This is because there are multiple taxes levied across the five or more States they traverse. With GST, the apples may be taxed just at a single rate, they may also move faster. While the example of a food item has been taken here, GST would applicable for most consumer items, except fuel, liquor and tobacco. GST, apart from making your life simpler through a single tax, may make some of your favourite items available throughout the year by improving the nation wide supply chain too.
Today, it is largely potatoes that have bulk share in cold storage facilities. Ushering in of GST opens up possibilities, for instance, of processors or producers setting up large-scale cold-storage facilities for all vegetables and fruits. This means you might get your Shimla apples in off-season, instead of just imported Fuji or Washington apples.
It is also possible that ‘ease of doing’ business, could bring in private investments and foster economic growth. So, don’t rule out the possibilities of more job offers and income.
GST is the way forward, with most developed nations having a unified tax structure. States will have to bite the bullet on revenues. But a proper compensation package would ensure that the apple-cart isn’t upset.
Source : http://goo.gl/78ajEA