Corporate India Seeks Speedy Implementation of GST- WHAT IS GST(Goods and Services Tax)?

Currently, a manufacturer needs to pay tax when a finished product moves out from a factory, and it is again taxed at the retail outlet when sold. But Goods and Services Tax -- GST -- is a comprehensive tax levy on manufacture, sale and consumption of goods and services at a national level.

India is planning to implement a dual GST system. Under dual GST, a Central Goods and Services Tax (CGST) and a State Goods and Services Tax (SGST) will be levied on the taxable value of a transaction. All goods and services, barring a few exceptions, will be brought into the GST base. There will be no distinction between goods and services.

It will not be an additional tax.

CGST will include:

1. Central excise duty (Cenvat).
2. Service tax.
3. Additional duties of customs at the central level.

SGST will include:

1. Value-added tax.
2. Central sales tax.
3. Entertainment tax.
4. Luxury tax.
5. Octroi.
6. Lottery taxes.
7. Electricity duty.
8. State surcharges related to supply of goods and services.
9. Purchase tax at the State level.

GST will help in widening the coverage of tax base, improve tax compliance, remove existing unhealthy competition among states and redistribute the burden of taxation equitably among manufacturing and services. Overall, it will result in increasing revenue at the center.

To implement GST a consensus must be reached with states. Earlier, state governments were not keen on GST, as they think it could lead to revenue losses. But recent developments indicate that most states have agreed to a compensation formula that will compensate them for their losses. The sticking points has been the inclusion of petroleum and liquor in GST which the states were opposed to.

Alcohol, tobacco, petroleum products are likely to be out of the GST regime.

The implementation of GST may happen from Fiscal Year 2014-15.

How will it benefit the Centre and the States?

It is estimated that India will gain $15 billion a year by implementing the Goods and Services Tax as it would promote exports, raise employment and boost growth. It will divide the tax burden equitably between manufacturing and services.

What are the benefits of GST for individuals and companies?

In the GST system, both Central and State taxes will be collected at the point of sale. Both components (the Central and State GST) will be charged on the manufacturing cost. It will reduces the number of instances where taxes need to be paid thus reducing the possibility of manipulation on the part of tax authorities and is hence assumed to be a much transparent mode of administering taxes. This will benefit individuals as prices are likely to come down. Lower prices will lead to more consumption, thereby helping companies.



Visit: http://www.thehindu.com/business/Industry/corporate-india-seeks-speedy-implementation-of-gst/article6104858.ece

First Discussion Paper On Goods and Services Tax In India: http://finmin.nic.in/gst/Empowered%20Committee%20of%20SFM%20%20First%20Discussion%20paper.pdf