GST passed in Indian Rajya Sabha
India is a big country and has many states. Over a period of time, due to many indirect taxes, Octroi, value added taxes(VAT) etc, many Goods and Services were a victim of multiple tax structures and consequent problems with the authorities. While the authorities too were having problems with such tax structure, the end consumers too at times had a disadvantage due to higher taxes leading to them paying more.
However, the companies were the worst sufferers and in a way, such multiple taxes prevented many an investors from putting more in India, and making many in the corporate world to evade taxes and promote corruption.
However, common Goods and Services Tax(GST) which is in force in many parts of the World, and even in Asia(such as in Malaysia) leads to levying of a single tax for many Manufactured goods and Services, and at a single point rather than at multiple points.
The companies benefit the most, but due to better tax compliance and lower administrative costs in longer run, authorities too gain.
Consumers might have to bear increased costs in certain respect, but will gain in many products and services.
Some ways the GST will impact different sections of Economy:
Economy as a whole:
=> Benefit by better compliance through real time matching of supplier & purchaser.
=> Reduction in approximately Rs 1.8 lakh crore annual loss due to excise duty exemptions
Corporates and Industries:
=> Tax credits to lower tax burden, improve profit margin for some of the firms. Many manufactured goods will have a reduced tax burden.
=>Increased ease of business due to uniform tax rate.
=>Trucks and vehicles carrying goods will take lesser time to reach their destinations, thus cutting fuel costs and gradually aiding in GDP growth.
=> A uniform tax rate of 12%, 17-18% or 40% .
=> In short term, many services like Telephone Bills, Insurance Premiums, Eating out, Air and Train travel might turn costlier, but eventually most products will get cheaper.
My view is that if the standard tax rate is kept slightly lesser than 18%(18% is the likely rate)- may be at 16 or 17%, it will be good for consumers and a higher rate will pinch very sharply in shorter run.
However, in longer run, this will lead to a simplified tax regime and will be a win-win for everyone.
Corruption will also go down likely.
Source referred: partial help taken from Times of India Website
Image source: https://pixabay.com/en/tax-forms-income-business-468440/
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View Comments
Earlier different States had different rates but this method helps manufacturers determine their selling rate and could be uniform. As you have pointed out a lot of 'paper work' is reduced.
@bestwriter initially we might see some spike especially services that we avail, but in terms of manufacturing goods and even for services in the longer run, we will see us consumers benefitting.
One concern I have is that the GST rate ought not be more than 18% as a very high rate would pinch big time.
Here is what some of the business tycoons in the country think about the GST bill:
Rajesh Agarwal, Co-Founder, Micromax Informatics
We welcome the clearance of GST Bill in the Upper House and would like to congratulate the Government and the Opposition for constructively working hard towards building the consensus on the same for greater good of India.
This is a historic landmark in the country’s taxation history as it makes the country one unified market and will bring uniformity to the structure. While we understand the nitty-gritties of the GST Bill, it is too early for us to discuss the real impact on the mobile ecosystem but it will definitely make the tax structure more transparent and less complex.
We hope that the government will work together with the industries to create a strong draft of the bill.The passage of the Goods and Services Tax (GST) Bill in the Rajya Sabha is a progressive measure as it can facilitate seamless movement of goods across inter-state borders enabling better efficiency and spurring growth of the (eCommerce) sector.
However, like every regulation, it needs to be implemented correctly, and should not make lives of eCommerce players even more complicated by burdening them with more administrative hassles