GST Bill passed in Rajya Sabha
As the Goods and Service Tax bill clears its way with a thumping majority in the Rajya Sabha, the Indian Inc. has responded positively on the move where several corporate heads said the bills passage would ‘ease’ doing business in the country.
Finance Minister Arun Jaitley on Wednesday moved that the GST Bill – The Constitution (One Hundred and Twenty-second Amendment) Bill, 2014 be discussed and passed in Rajya Sabha. The discussion on the GST bill came after months of discussions between the ruling party and the opposition – with both sides meeting multiple times to negotiate amendments.
The Goods and Services Tax Bill or GST Bill , officially known as The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014, proposes a national Value added Tax to be implemented in India from June 2016.
“Goods and Services Tax” would be a comprehensive indirect tax on manufacture, sale and consumption of goods and services throughout India, to replace taxes levied by the Central and State governments. Goods and services tax would be levied and collected at each stage of sale or purchase of goods or services based on the input tax credit method. This method allows GST-registered businesses to claim tax credit to the value of GST they paid on purchase of goods or services as part of their normal commercial activity. Taxable goods and services are not distinguished from one another and are taxed at a single rate in a supply chain till the goods or services reach the consumer. Administrative responsibility would generally rest with a single authority to levy tax on goods and services. Exports would be zero-rated and imports would be levied the same taxes as domestic goods and services adhering to the destination principle.
The introduction of Goods and Services Tax (GST) would be a significant step in the reform of indirect taxation in India. Amalgamating several Central and State taxes into a single tax would mitigate cascading or double taxation, facilitating a common national market. The simplicity of the tax should lead to easier administration and enforcement. From the consumer point of view, the biggest advantage would be in terms of a reduction in the overall tax burden on goods, which is currently estimated at 25%-30%
What changes there would be if India launches GST-“The tax rate under GST may be nominal or zero rated for the time being. It has been proposed to insulate the revenues of the States from the impact of GST, with the expectation that in due course, GST will be levied on petroleum and petroleum products,”. According to current minister for state for Finance Mr. Jayant Sinha, the government has assured states of compensation for any revenue losses incurred by them from the date of introduction of GST for a period of five years(may be for a period less than 5 years).