Goods Services and Tax(GST) is the biggest tax reform since 1947 and has the capability to take the economic unification of India forward. For most of us news this week was shaped in the form of the bill, which finally received a green signal in the Rajya Sabha.
In this fiasco some have clearly missed out the point of the bill being: GST will be absorbing all the existing forms of taxes that consumers have to pay into one unified tax. To explain it furthermore, GST bill solves the problem of the direct and indirect taxes i.e. current taxation system.” Goods and Services Tax (GST) is an indirect tax reform which aims to remove tax barriers between states and create a single market”. Today it is reasonable to assume we pay well over 20% tax for most merchandise we buy. In GST, consumers should benefit in two ways. Firstly, all taxes will be collected at the point of consumption. It means that if a shirt is taxed at 18%, it will include both central government’s taxes and state government’s taxes. Transparency in taxation should deter governments from indiscriminately increasing taxes as there is bound to be public backlash. Secondly, once barriers between states are removed, we as consumers will not end up paying “tax on tax” which is what happens when goods move across state borders.
The GST bill has a ‘dual’ structure, the central and the state thus giving them both equal powers to administer over their respective taxes. Besides the Central and State it also has another type of tax called the integrated GST to handle the inter-state transactions. Also, taxes such as excise duty, service tax, sales tax, VAT, entry or octroi will all be clubbed into the same heading.
According to Finance Minister, Arun Jaitlety the GST will be instrumental in helping the GDP of India to grow by 2 percent.
The GST also offers a solution to the multinationals as it breaks down the indirect tax structure into one single tax payable by the companies. As for the consumers it is extremely beneficial as they need to pay less for TVs, Air Conditioners as the passing of the bill has a direct impact on these goods. ‘Make in India’ an initiative taken by Prime Minister Narendra Modi comes to the fore. Lastly, there will be a decline in prices of two and four wheelers.
After a 5-hour long debate on the country’s most important tax reform issue, the GST Bill – The Constitution (One Hundred and Twenty-second Amendment) Bill, 2014 got a nod from the Rajya Sabha on the 3rd of August, 2016.
The bill was passed by a thumping majority of 203 Ayes and no one opposing the move with zero Noes.
That’s a milestone in the polity of India and a step ahead to a corruption free India.