KNOWING ABOUT GOODS AND SERVICE TAX
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 17-9-2014
What is GST
Simply put, goods and services tax is a tax levied on goods and services imposed at each point of sale or rendering of service. Such GST could be on entire goods and services or there could be some exempted class of goods or services or a negative list of goods and services on which GST is not levied. GST is an indirect tax in lieu of tax on goods (excise) and tax on service (service tax). The GST is just like State level VAT which is levied as tax on sale of goods. GST will be a national level value added tax applicable on goods and services.
A major change in administering GST will be that the tax incidence is at the point of sale as against the present system of point of origin. According to the Task Force under the 13th Finance Commission, GST, as a well designed value added tax on all goods and services, is the most elegant method to eliminate
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nefit in terms of easy compliance, removal of cascading effect of taxes and enhanced competitiveness. The Government shall have better control on leakages, higher revenue efficiency, consolidation of tax base and it may be easier to administer and monitor the law. Consumers will also benefit from likely reduced prices and single transparent tax structure.
Steps involved in GST introduction
Following steps are needed on political, administrative and technological fronts –
* Constitutional amendments (pending in Parliament; Standing Committee Report submitted)
* Drafting of GST law (process started)
* Strong political commitment (looks a distant reality in present political set up).
* Arriving at common/general consensus including political agreement (efforts are on)
* Setting up a high level committee for monitoring the project of GST (Empowered committee is in place).
* Preparing a blueprint/road map for GST (not clear so far)
* Creating a conducive environment for GST
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nt on this major tax reform. However, he appealed to all parties to get GST passed in 2014-15. In ultimate outcome, GST reform remains an unfulfilled promise and a broken dream.
Union Budget 2014-15 (Main)
It has been stated that the question of whether to introduce Goods and Service Tax (GST) should be introduced or not must now come to an end. It is hoped that Government would be able to find a solution to issues of surrendering tax jurisdiction by states and compensation so that a solution is found in the course of year itself and legislative scheme is introduced which enable the introduction of GST. The budget states that this will streamline the tax administration, avoid harassment of business and result in higher revenue collection, both for the centre and the states. The aim has been to prepare the indirect tax regime for a smooth transition to goods and Service Tax.
Though no clear cut time lines have been set, it is targeted that GST may be introduced in India in 2015-16. T
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rices of goods and services across the board. The consensus among the states (>30) and between the Centre and states hold the key. Once consensus is reached, GST may see the light of the day in a year's time, even during any time of the year, it being a transaction based tax.
While there is no doubt that GST must see the light of the day, the sooner the better, it should also address the problems in present day taxation i.e., it should seek to achieve rationalization, boost transparency, offer flexibility to Union and states and broaden the much needed tax base. If GST comes into operation, it would achieve the status of integrated and most comprehensive set off tax structure in India leading to enhanced economic activities and tax buoyancy. GST would offer a complete set off and there will be no tax cascading effect as there will be no tax on tax, an ideal proposition for all. Even the Government won't mind as tax revenues would go up substantially (VAT is a live case).
It i
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