Article 366, better known as the GST act is finally ready to be enforced and has completed it's journey of 16 years, since 2000. GST was the brainchild of Atal Bihari Vajpyee with an aim to make India a single, digital economy.
Goods and Services tax, is not a new concept. The model is a success in 165 nations so far, including New zealand, Pakistan, and Australia. India would be 166th nation in the world to adopt a single tax system.
GST is set to replace 17 indirect taxes levied on manufacturing/ sales of goods and services.
Earlier the Central Government collected taxes on the manufacture of goods( excise duty) whereas state government collected taxes on the sales of the same good. Moreover, octroi/entry tax was charged on inter state trade. Taxing on every stage, lead to taxing on the tax already charged, technically termed as cascading effect. The consumer ended up paying tax upto 30-44% on the MRP of the comodity. GST scales down these taxes on goods and services to as low as 18%. Lower tax rates do mean lower revenue for government, but an efficient system, free of tax evasion is more benificiary.
GST bill was passed by total majority in Rajya Sabha in August 2016, it is considered one of the major economic reform in India since independence in 1947.
"One nation, one tax, one market", is the sole moto of rnforcing GST, making India a single ecnomic entity- boost ecnomic growth by allowing free flow of goods throughout the country, regulated prices, in turn accelerating GDP growth. Scholars claim that by enforcing GST, GDP growth will increase by 1%-2% in an year.
A single tax scheme, merges all the markets in the country into one, promoting a unbaised, competitve market where prices don't alter, state to state.
Technically, GST is not a single tax, rather the tax is split into (a)Central goods and services tax(CGST), collected by central government. (b) State goods and services tax(SGST) collected by state government (c) Integrated goods and services tax (IGST) split between state and central on a pre decided ratio, charged on inter state trade. This does not mean that the consumer pays three diffrent taxes, all these taxes will be collected under a single tax, GST. The revenues will be split on the basis of percentages of SGST, CGST and IGST, as decided by the GST council. The council was formed after the bill was passed to devlop a detailed plan. The council comprised of the union finance minister, Mr.Arun Jaitely and...