The GST bill has been passed in Lok Sabha. The bill is now waiting to be approved in the Rajya Sabha.
Here are 8 things you must know about GST –
- What is GST? GST or the Goods and Services Tax will replace all the existing taxes of VAT, Sales Tax, Excise Duty, Customs Duty, Central Sales Tax and Octroi. Some goods are also taxed differently based on whether they move inter-state or intra-state. With the introduction of GST there will be a single levy on goods and all the taxes mentioned above will go away.
- What is the approval timeline for GST? Since the implementation of GST requires an amendment in the constitution is has to be approved by 2/3rd majority in the Lok Sabha as well as 2/3rd majority in Rajya Sabha. It has to be also approved by atleast ½ of the Legislatures in States. And then finally receive President’s assent.
- Why are so many rates an issue? The several rates which are in force increase the compliance burden for businesses. Besides this some goods may invite more than one type of tax and there are no clear mechanisms for taking credit where some taxes are already paid. This increases the overall burden on the goods and for businesses who manufacture them.
- When will GST be implemented? Our FM Arun Jaitley has committed to implement GST from 1st April 2016.
- What is the GST Rate? The GST Rate is expected to be around 24% – 27%.
- Will GST make goods expensive? The introduction of GST will lead to reduction in cascading effect of taxes – which means a good will attract only one single type of tax rather than multiple taxes at multiple points. Also, as businesses will not be subject to multiple levies and compliances – this is bound to increase the overall efficiency. Though experts have been saying that our GST rate is much higher than the rates around the world.
- Why are some states opposing it? Since this tax will involve going away of some of the state levies it shall impact revenue collections of the states and therefore there is opposition from the states. The Centre has mentioned that they will try to compensate the states in a way that their revenues don’t go down significantly.
- Does it cover all Goods? Not exactly, the government has chosen to keep liquor out of the GST regime. Also petrol and diesel and tobacco have been kept out of the GST route. This has invited criticism since these products attract a lot of levies and keeping some goods exempt from GST is bound to displace the GST roll out efforts where states may request some more products to be made exempt.
Hope this list helps you understand what GST is about. We’ll also bring quick check on what the Undisclosed Foreign Assets & Income Bill is in our next post. Meanwhile, do comment with your feedback or write to us firstname.lastname@example.org if you have any questions.