Goods and Service Tax (GST)

These days a very hot topic/name is floating around us very frequently and that is Goods and Service Tax (GST). Many of us wonder what is this GST all about and why there is so much of hue and cry for this and if it is so problematic then why are we bringing that law at all. Today we will discuss about GST.

GST is a name of tax which will be replacing all the existing indirect taxes in India which are nearly 20 in numbers and amount to approx 30% in terms of taxation out of which common people even don't know the name of some of taxes that are imposed on them so once this GST is passed by both the houses of parliament(Lok sabha and Rajya sabha) it will replace all the indirect taxes. Currently GST is in force in nearly 150 countries and max rate of GST currently is in Denmark and Sweden which is 25% and lowest is in Canada which is 5%.

In India, the unified tax will take the form of a 'dual' GST, to be levied concurrently by both the Centre and States i.e. in short the unified tax will comprise of both Central and State GST. Liquor has been kept completely out of the purview of GST. Petroleum products has been excluded from the list of product that will be covered under GST for the first three years from day when GST will be adopted however, if there is any kind of loss incurred by State governments than the Central government will bear that cost.  

Benefits of GST

1. As there will be only one tax throughout India all the goods and service will be available at same price at pan India level and it will ease in doing business as mobility of products from one state to another will become easier.
2. Reduction in corruption level.
3. At least general public will be well aware of that in what respect they are paying the tax.
4. Indian GDP may increase by 2-2.5 %
5. There can be an increase of 12-15% in exports of products.
6. As the taxation system will be eased and become transparent by replacing all the indirect taxes by a new one i.e. GST so the foreign investors/companies will be attracted to do business in India which will result in more job creation.
7. In long run the price of products may come down.

What will be the rate of GST?

Till date the proposed rate at which GST will be imposed is approx 27% which is too high and will be finalized by the GST council at later stage and which may be around 18-20% as per the statement given by Finance Minister Arun Jaitley in Lower House. One percent extra can be charged by State governments from where the goods are originated.