Short notes on GST(Goods & Service Tax)

Ø  Rajya sabha passed Goods & Services Tax(GST)bill on 7^th July 2016.

 GST was first proposed by former Finance Minister P. Chidambaram, in 2005

v  Replaces the all indirect taxes(sales taxes like CST, VAT,service tax,excise  tax)except Customs duty.

v  With this the country had come under One Country – One tax concept.

v  The GST have two structures in it: Central GST(CGST) & State GST (SGST)

v  GST regime brigs seamless and uniform market across the country and check the evasion,boost the growth.

v  Short term effects:

ü  Services like online shopping, flights,hotel services and train tickets, Jewellery,ciggerattes,branded clothes  and banking  get costlier.

ü  Goods like SUVs,two wheelers,fans,aircoolers and water heaters get cheaper,

v  Longterm effects :

ü  Will elimante multiple taxes on the firms and do the ease of business.

ü  Reduces the logistics cost due to elimination of inte-state taxes.

ü  Capital goods prices could fall by 12-14% and boosts the GDP 0.5%

ü  Reduce the black money,the need for financial documentation is more.

·         GST if set at 18% is less for the Goods compare to the present 24-26%.

·         GST if set at more than 15% on present service tax rate.

·         Excemptions from GST – Petrol,Diesel,Alchol,Power and Real estate.

v  States can fix their own state GST.

v  Centre will get the right to impose GST on state.

v  Out of 29 states 15 states should agree for this bill.

v  Amendments to the bill.

§  No surcharge of 1%

§  Compensation for states for 5 years.

§  Establishment of special council to solve conflict between centre & state,

§  Loksabha approved GST bill on 8^th August 2016 with few amendments.

§  All 443 members present in the Lok Sabha — which had earlier passed it in May 2015 —voted in favour of the Constitution (122nd Amendment) Bill, 2014

·         It provides for constitution of a Goods and Services Tax (GST) Council by inserting Article 279A in the Constitution. The Council will recommend to the Union and States on the inclusion and exclusion of goods and services.

·         The bill  passed in Rajya Sabha after which more than a half of India's 29 states  approved it before the central and state governments would get equal powers to tax goods and services.

·         With the passage of GST bill at every stage, the whole country, which is one-sixth of world's population, would become a single market and would give a necessary fillip as far as the trade is concerned.

·         The Assam Assembly  become the first state to ratify The Constitution (122nd Amendment) (GST) Bill, 2014.

·         Tax credit is possible with the implementation of GST.

Tax credit : A tax credit is a tax incentive which allows certain taxpayers to subtract the amount of the credit from the total they owe the state.