GST Bill - Streamlining the Tax System

Posted in Finance Articles, Total Reads: 605 , Published on 01 October 2015

GST i.e. Goods and service tax is an indirect tax that bring collectively almost all the tax that are to be imposed on all goods and services under a single banner. GST is contrary to all the other taxes, wherein they are levied separately on goods and services. On implementation of GST which is value added tax (VAT) will be replacing all the indirect taxes imposed by Indian central and state government on goods and services on which the decision of implementation is still pending. It aims at being comprehensive for almost all goods and services. India is a democratic and federal republic and hence implementation of GST will be decided by both Indian central and state government as the Central and State GST. If GST is implemented then import tax will be same as levied on domestic goods and services and export tax will be zero rated.

In 2000, BJP government led by Atal Bihari Vajpayee was the first government for starting discussion on GST by creating an empowered committee which was headed by Asim dasgupta, Finance minister, government of west Bengal. The committee was provided with the task of designing the GST model and supervising the model. The GST model was seen as much more improved and advance than the pre-existing central excise duty at the national level while more improved and advance than sales tax system at the state level. Moreover this Goods and Service tax will bring a significant change and take the first logical step towards the existing comprehensive indirect tax reform in the country.

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In 2007 Congress government finance Minister P. Chidambaram considering all the above mention points made an announcement during the central budget of 2007-08 that GST will be introduced or implemented from April 1, 2010 and the empowered committee of the state finance minister with the central government will plan to create a road map for introduction of GST in India.

After this, a joint working group was setup by the Empowered committee of state finance ministers on May, 2007 with Finance minister as the advisor, Empowered Committee secretary as Co-convenors and the Joint secretaries of the revenue department of Union finance ministry and all the Secretaries of finance as the members of the team. The Joint working group after much of its discussion with authorities and members of chambers of commerce and industry, handover its report to the empowered committee on November 2007. This report was then discussed in the meeting held at the end of November of the committee. After detail discussion certain amendment and modification were made in the report and the final report was sent to the government of India on April 2008. On 12 December 2008, the Government of India gave their comments on the report send by the empowerment committee which were duly considered by the committee

Under the proposed GST, the tax rate would necessarily would come down, but the tax revenue collection would go up or increase due to increased buoyancy also the assesses number would increase by 5-6 times. The work is carried out by the government on development of special IT platform for smooth implementation of the Proposed Goods and service tax i.e. GST. The special purpose vehicle (SPV) of IT christened as GST N (network) will be operated and belonged to three main stakeholders- the central government, the state government and the technology partner NSDL. S Dutt Majumdar, the chairman of Central Board of Excise and Customs (CBEC) while addressing a national conference on GST decision s said that there was no need of alarm if GST was not rolled out in April 2012.

However in 2015, again the issue of GST came in picture, with lok sabha passing the much passing the much awaited and delayed constitutional bill for the introduction of Goods and service tax as the BJP government led by Narendra modi holds a majority share in Lok sabha even against the opposition of congress and other parties, thus building a new way for the bill. The Bill was then sent by the rajya sabha to the parliamentary committee for the review. The congress government in opposition said that it favors GST but want some amendment which were made by the BJP government in the bill to be checked by the congress as it holds majority in rajya sabha.

The bill before implementing has to passed by both the houses of parliament by two-third majority, after that it needs ratification from majority of the 29 states before its schedule rollout next year i.e. April 2016. It is still not implemented as it requires some changes in the basic bill and various states are not in favor of various aspect of the bill, especially in sharing of revenue collected through GST. The finance minister in case of any revenue loss vowed that he will take care of it, and the new uniform indirect tax will be less than 27%. The GST bill is to be implemented by the government of India from April 2016 which will include service tax, sales tax, entry tax, octroi etc. and will provide greater relief to tax payers. The bill not only lower inflation but will promote growth in long run, also the industries has welcomed the bill with both hands and sounded confident that the deadline for implementation of bill is met. It will make possible the understanding of double taxation and build a foundation for a common national market. The biggest advantage is that for the consumer is the reduction of overall tax burden, and will make product more competitive in both domestic as well as international market. GST have transparency in any of its aspect and is easier to administer

This article has been authored by Swapnil Zunke from IIM Kashipur



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