Good And Services Tax- The Most Awaited……

On sixth of July 2006 our finance minister and our present honorable president Mr Pranab Mukherjee in his budget presented good and services tax and said that it would be implemented from first of April 2010 but sadly the date was extended to first of April 2016.

Good and services tax is formulated to integrate state economies and boost overall growth.It will lead to abolition of other taxes for example octori, central sales tax,entry tax,stamp duty etc.

GST is a comprehensive tax levy on manufacture,sales and consumption of good and services at national level through tax credit mechanism, tax is collected on value added goods and services at each stage of sale or purchase in supply.It is been estimated that GST is likely to improve tax collection and boost India’s economic development by breaking tax barriers between states and integrating India in uniform tax regime which would simple not cumbersome,transparent and not complicated.

It is been concluded that the taxation will be divided equitably between manufacturing and services through a lower tax rate by increasing the tax base.It will certainly help in building transparent and corruption free tax administration and would only be levied at the destination point not all the points.
It is estimated that India will gain about 15 million a year by GST and it would promote growth and employment as well as export related activities,it will also divide tax burden equally between manufacturing and services.

 
It is expected to fix the GST rate between 14%-16% or it would be in a range that would make export competitive, most of the other countries in which are under GST regime is having it about 20%. One of the other most important things is that GST is not applied on tobacco ,alcohols,petroleum products etc.

 
But still the implementation of GST is not as simple there is collision between the center and the states relating to GST.States have been arguing that there revenues will going to decrease as major taxes will now be under the center where as center is not as they see it. Center had also said to financially support all those whose revenue tends to decline.

 
From the consumer point of view who is considered be lender of last resort,with GST cascading effect of taxes will be gone.It is also considered over a period of time lower tax burden would translate into lower tax prices for goods which of course depend upon the rate of GST.

 
It is concluded that it is not only for the benefit of consumer but corporates and economy will also enjoy its benefits as it would simplify indirect tax to single tax.As per the study of applied economic research it is estimated that GST tax collection will boost gross domestic product between 0.9%-1.7%. and will also reduce fiscal deficit to a large extent.

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