Ahead of the long-delayed Goods and Service Tax (GST) bill being taken up by the Rajya Sabha, the government has circulated to the MPs the amendments it has proposed in the GST bill. There has been a lot of debate over the GST; here we have simplified what the bill is all about and how it will affect you and our economy.
- What is GST?
GST is nothing but a single tax on any supply of goods or services or both. The tax is supposed to be comprehensive tax that will subsume all the other smaller indirect taxes like service tax, etc.on consumption
- How GST will make the things simple?
The GST will wipe the indirect taxes, replacing around a dozen indirect taxes and duties levied by the Centre and state. There will be only three types of GST- central, state and integrated GST. It will eventually lead to empowering both centre and states as it will eliminate any distinction between the taxing powers of Centre and states.
- What is the structure of GST?
The GST is supposed to have a dual-tax structure. GST rates could settle at anywhere between 20% and 24%. The centre will collect taxes from traders having a turnover of over Rs 1.5 crore while the states will tax those having a turnover between Rs 25 lakh and Rs 1.5 crore.
- How will GST be beneficial?
The GST will mitigate cascading or double taxation, facilitating a common national market. The impact of this would hugely beneficial for consumers as the tax burden on inter-state logistics will be cheaper. From the consumer point of view, the biggest advantage would be in terms of a reduction in the overall tax burden on goods.
- How companies will get benefitted?
The GST is expected to reduce cost of logistics. In India logistic costs form 14% of value of goods versus 7-8% in developed countries. After the implemented of the GST the organized sector would be in a better position to compete with the unorganized sector on prices. This could shift demand to companies in the organised sector.
- What are the challenges ahead of the GST?
Since the GST will bring new businesses into the tax net the current administration and tax bureaucracy would have to deal with a higher number of tax assesses. The GST will demand better co-ordination between the tax departments of all the state and central governments.