Every One Must Know About GST

Finally, a defining moment in India’s tax reforms has commenced. After a long time, it appears that a compromise formula has been reached between the Centre and States, giving the way for the introduction of a harmonized GST scheme from April 1, 2016.

The revised GST bill tabled in Lok Sabha for passage is in lieu of the 2011 GST bill, which has lapsed. Therefore, the basic outline of the revised GST bill broadly remains the same. GST will subsume into one levy all indirect taxes imposed by the Centre as well as VAT and local levies imposed by States

The basic objective  is that all taxes which commence with import, manufacture, and production of goods and provision of services and end with consumption are eligible to be subsumed,where two rates are proposed:

(i) a minimum rate for items of basic importance; and

(ii) a fixed rate for goods in general.

Exports are exempt from tax levies. A small taxpayer category is exempt from CGST, SGST and input tax credit. For discussion only. Not intended to be an opinion or advice.

Economic Benefits

In theory, a GST scheme can deliver economic benefits to all stakeholders. But the actual realization of these benefits will depend on how effectively the GST Act is administered. Indeed.Currently, India’s tax ratio as measured with reference to its GDP is low, at around 10%. A well-administered GST regime can improve this ratio. It can also help in keeping under check other economic parameters such as fiscal deficit and inflation.

At this time, the GST scheme is more than a year away from becoming reality. It is the responsibility of all stakeholders – the Central and State governments, business entities, professionals, academicians and other parts of the members- to use this time to become well-informed of the salient administrative and operative mechanisms of GST. This will help in smoother transition and better administration while lowering the incidence of litigation.

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