Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 27-3-2018 – India witnessed its biggest ever tax reform in July, 2017 when it migrated to Goods and Services Tax (GST) w.e.f. 1st July, 2017, subsuming therein over a dozen central and state indirect taxes. Given the nature of its federal structure, India followed a dual model of GST with simultaneous levy of Central and State GST. India is not the only country to have GST (or modified form of GST which is nothing but a value added tax). This was done with multi-slab GST rates so as to take care of heterogeneous of socio-economic profile. So India adopted a four tier GST rates, viz, 5%, 12%, 18% and 28%, besides there being a zero rate, composition rates and compensation cess on specified goods. In certain cases, a fixed levy has been specified (e.g., restaurants, hotels, jewellery etc) and in some cases, payment of GST has been prescribed under reverse charge where recipient has to discharge tax liability. There are mu
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exemptions and special arrangements to meet specific policy objectives, but also from differences of approaches in the definition of the jurisdiction of consumption and therefore of taxation. In addition, there are a number of variations in the application of value added taxes, and other consumption taxes, including different interpretation of the same or similar concepts; different approaches to time of supply and its interaction. Over 160 countries in the world are currently levying VAT or GST. After India, UAE and other gulf countries have introduced VAT w.e.f. 1st January, 2018. Other nations working towards VAT / GST system include Afghanistan, Bhutan, Micronesia, Palau, Syria etc. Globally, indirect tax rates vary from zero related to as high as thirty percent. Recently, World Bank made a comment in India Development Report about Indian GST system which is yet to take off properly and is in a nascent stage. Accordingly, Indian Goods and Services Tax (GST) system is among the mos
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ore GST rates are Italy, Luxembourg, Pakistan and Ghana. According to the World Bank's biannual India Development Update report, most countries in the world have a single rate of GST on other hand, 49 countries use a single rate, 28 use two rates and only five countries including India use four rates. Not only this, it is not just the tax rates that distinguish India's GST system from the rest of the world. The fiscal threshold for businesses to fall under the full GST impact in India is also the highest among all comparable countries. It is an admitted fact that there is increased administrative tax compliance burden on firms and a locking-up of working capital due to slow tax refund processing. High compliance costs are also arising because the prevalence of multiple tax rates implies a need to classify inputs and outputs based on the applicable tax rate. Along with the need to apply the correct rate, firms are required to match invoices between their outputs and inputs to be
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scounted as theory is always far away from practice and economist's perception may not always hold good. If what he says comes true, it is also a reflection on all implementation agencies including the Government itself. GST in ultimate analysis is likely to have positive impact on India's economic growth and businesses, adding to tax GDP ratio, revenue, cost effectiveness, business efficiency and quality of life. But not overnight, over a period. GST is only a beginning and not an end in itself. It is a continuous process and as such only in work- in-progress stage. However, drawing actively from user-feedback, the government has been very alert to implementation challenges and continues to take steps to make GST compliance more simple and efficient. Despite the initial hiccups, the introduction of GST is having a far-reaching impact on reducing tax-related barriers to trade barriers, which is one of the primary goals of the introduction of GST in India. = = = = = = = = = = –
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