Goods and Service Tax Bill (GST Bill) – An Overview
The Goods and Services Tax is one of the main items on the finance agenda of the BJP government. The present Finance Minister Mr. Arun Jaitley has said that it can raise India’s GDP by one to two per cent.
Goods and Service Tax Bill
- The Bill seeks to amend the Constitution to introduce a goods and services tax (GST) which will take the place of various indirect taxes, including the Central Excise Duty, Countervailing Duty, Service Tax, etc. It will also lead to removal of State value added tax (VAT), octroi and entry tax, luxury tax, LBT etc.
- It will be one of the biggest taxation reforms in the history of India.
- GST will be levied and collected on value addition at each stage of sale or purchase of goods or supply of services based on input tax credit method but without State boundaries.
- The tax-rate under the proposed GST would come down, but the number of assesses would increase by 5-6 times
- Introduction of GST would also make Indian products competitive in the domestic and international markets.
- This tax, because of its transparent character, would be easier to administer.
- With GST, taxes are leveled fairly among all the businesses involved, whether they are in the manufacturing, wholesaling, retailing or service sectors.
- According to experts, by implementing the GST, India will gain $15 billion a year. This is because, it will promote more exports, create more employment opportunities and boost growth. It will divide the burden of tax between manufacturing and services.
- In the GST system, taxes for both Centre and State will be collected at the point of sale. Both will be charged on the manufacturing cost. Individuals will be benefited by this as prices are likely to come down and lower prices mean more consumption, and more consumption means more production, thereby helping in the growth of the companies.
- The Narendra Modi government made passage of this bill a top priority.
- The bill has been cleared by the Lok Sabha or Lower House. The government now has to ensure the bill clears the Upper House or Rajya Sabha, where it is in a minority. After that, the proposal has to be approved by more than half of the 29 states, thus it is going to be a lengthy process.
- The bill provides for a GST Council, a joint body of the states and the Centre. The GST Council will be the body which decides which taxes levied by the Centre, States and local bodies will go into the GST; which goods and services will be subjected to GST; and the basis and the rates at which GST should be applied.
- For industry, the GST adds to ease of doing business, makes tax compliance simpler and boosts manufacturing by compelling states to be more competitive. For consumers, it is intended, in the long run, to reduce prices with more efficient delivery of goods and services.
- Under the Bill, alcoholic liquor for human consumption is exempted from GST. Also, it will be up to the GST Council to decide when GST would be levied on various categories of fuel, including crude oil and petrol.
The implementation of GST will help create a common Indian market and reduce the cascading effect of tax on the cost of goods and services. It will impact tax structure, tax incidence, tax computation, credit utilization and reporting, leading to a complete overhaul of the current indirect tax system. Thus we are hoping it comes into existence as soon as possible.
Goods and Service Tax Bill
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