What are the pros and cons of the introduction of a GST in the Indian tax system?
GST was proposed by Kelkar task force to meet the target of Fiscal Responsibility and Budget Management Act, 2004 (FRBM) . This tax will subsume all indirect taxes. Some indirect taxes are: • Vat • Sales tax • excise duties • Entertainment tax • entry tax etc. It will be a dual GST and revenue will be shared equally between centre and states. An empowered commitee has been set up to clear up the diputes between centre and states, so that states' apprehensions can be cleared up amicably.
Hie Pranesh **Pros of GST bill :** 1. GST is a transparent tax and also reduce number of indirect taxes.With GST implemented a business premises can show the tax applied in the sales invoice. 2. GST will not be a cost to registered retailers therefore there will be no hidden taxes and and the cost of doing business will be lower. 3. Benefit people as prices will come down which in turn will help companies as consumption will increase. 4. There is no doubt that in production and distribution of goods, services are increasingly used or consumed and vice versa. 5. Separate taxes for goods and services, which is the present taxation system, requires division of transaction values into value of goods and services for taxation, leading to greater complications, administration, including compliances costs. In the GST system, when all the taxes are integrated, it would make possible the taxation burden to be split equitably between manufacturing and services. 6. GST will be levied only at the final destination of consumption based on VAT principle and not at various points (from manufacturing to retail outlets). This will help in removing economic distortions and bring about development of a common national market. 7. It will also help to build a transparent and corruption free tax administration.Presently, a tax is levied on when a finished product moves out from a factory, which is paid by the manufacturer, and it is again levied at the retail outlet when sold. **Some of Disadvantages/Cons of GST in India are given below** 1. Some Economist say that GST in India would impact negatively on the real estate market. It would add up to 8 percent to the cost of new homes and reduce demand by about 12 percent. 2. Some Economist says that CGST(Central GST), SGST(State GST) are nothing but new names for Central Excise/Service Tax, VAT and CST.