The Present Status of GST
The GST Bill, officially known as the Constitution (One Hundred and twenty second Amendment) Bill, 2014, proffers a national Value Added Tax to be introduced in India from June 2016.
On 6th May 2015, in order to introduce GST, the Lok Sabha passed the much delayed Constitutional Amendment Bill to pave the way for a new Bill on the uniform tax regime. The Bill is set to be sent to a Parliamentary Committee for review by the Rajya Sabha, where the opposition has said that they are in favor of the GST Bill, but want some amendments to be made by the Union Government to be vetted by a select committee of the Rajya Sbabha.
The GST Bill, that was conceived twelve years ago, has been kept pending because there were some changes needed in the basic Bill and all states were not in favor of many provisions of the Bill particularly with the clause dealing with sharing of the revenue collected through the GST.
However, the incumbent Finance Minister has assured the states to compensate them for any revenue loss by saying that the new uniform indirect tax will be much less than 27% that has been recommended by an expert panel.
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Advantages of Goods and Services Tax
The advantages of the Goods and Services Tax, an efficient tax system, neutral in its application and attractive in terms of its distribution, are :
Elimination of multiplicity of taxes and their gushing effects;
Rationalization of tax structure and simplification of procedures of its compliance;
Harmonization of States and Central tax administrations that would abate duplication and compliance costs;
Wider tax base, essential for decreasing the tax rates and eliminating classification disputes.
GST would substitute most indirect taxes which are currently in place such as service tax, Central Excise Tax, Purchase Tax etc.
The Goods and Services Tax structure would follow work on the destination principle according to which imports would be subject to Goods and Services Tax, while exports would be zero-rated. The State tax would be applicable in the State destination, in the context of inter-state transactions, as opposed to that of origin.
Rationalization of tax structure and simplification of procedures of its compliance;
Harmonization of States and Central tax administrations that would abate duplication and compliance costs;
Wider tax base, essential for decreasing the tax rates and eliminating classification disputes.
GST would substitute most indirect taxes which are currently in place such as service tax, Central Excise Tax, Purchase Tax etc.
The Goods and Services Tax structure would follow work on the destination principle according to which imports would be subject to Goods and Services Tax, while exports would be zero-rated. The State tax would be applicable in the State destination, in the context of inter-state transactions, as opposed to that of origin.
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