Finally, a defining moment in the history of Indian Revenue system is about to come. Soon the GST implementation date is about to be finalized. We will be witnessing days when our country will work as a Single-tax economy.
Before we move ahead in the discussion, it is important to understand ‘What is GST’. GST or goods or services tax is a type of Value added tax that will be comprehensively levied on the manufacture, sale, and consumption of goods as well as services. It will replace almost all indirect taxes that are presently being levied by all state and central governments.
On August 3, 2016, 122nd Constitutional Amendment Bill was passed by the Indian parliament. Before this historic event, the GST bill was tabled in Lok Sabha for many times. But, the bills lapsed and did not come into effect. But after the passage of the GST Bill in Lok Sabha now it is assured that soon the same will implemented in our country on a national level.
GST will subsume majority of the indirect taxes imposed by both the state and central governments at present. Some of the popular indirect taxes are VAT, sales tax, service tax, Excise duty, Entry tax etc. At present, the revised GST bill keeps Basic Customs duty, petroleum products, real estate transactions and various local body levies outside the ambit of GST.
GST is regarded as the Single-tax structure. Thereby has been a lot of ambiguity as What is GST, and how it will be levied? It is important to know that the similar tax structure like GST is already adopted by various developed and developing economies all over the world. In India, the GST will be levied in three forms i.e. SGST, CGST and IGST. SGST is state GST, CGST is central GST and IGST is integrated GST.
As it is proposed, GST will allow the Seamless flow of input tax credit at all the levels. The problem of non-availment or non-adjustment of input tax credit of VAT with excise duty and various other scenarios will be curbed thereby promoting business and overall development of Indian economy. The proposed technology-driven Tax structure i.e. GST will be first of its kind in the country and thereby will ease the doing of business. There will be simplicity and an overall reduction in the administrative costs.
Last but the not least, GST will deliver economic advantages to various stakeholders but the actual realization will depend on GST will be administered. At present, the Indian Tax ratio in comparison to GST is low but a well-developed GST structure can improve this ratio.