Goods & Services Tax and its genesis.
The much-awaited GST, the biggest reform to India’s Indirect Tax regime, since the liberalization of economy in early 90’s, which will be implemented from April 1, 2017, is expected to make lives easier as it will eradicate 17 indirect taxes and also give a boost to Indian economy, manufacturing sector as well as consumers.
Indirect Taxes are administered by Central Board of Excise and Customs (CBEC) under Department of Revenue, Ministry of Finance of Govt. of India.
In GST System both Central GST and State GST will be charged on manufacturing cost and will be collected on point of sale. An Integrated GST (IGST) will be levied on inter-state supply of Goods & Services and will be collected by centre. This will benefit people as prices will come down which in turn will help companies as consumption will increase.
Doing Business now will be easier as multiple layers of taxation like: Service Tax, Value Added Tax, Central Sales Tax, Entry Tax, Luxury Tax, license fee etc., will merge with GST. This will further bring more transparency & convenience in ease of doing business.
GST is a transparent Tax and also reduces number of indirect taxes within the taxing territory. Once GST is implemented, a business entity on its premises can show the tax applied in the sales invoice. Customer will know exactly how much tax they are paying on the product they bought or services they availed.
As goods will move in and out of states without any hurdle, it will lower down the logistics and inventory management costs of corporates, which is quite high in India.
Since there will be a uniform tax structure for them, many double taxation rules will be removed. They will save costs and the benefits will be passed on to the consumer. Make in India will get a boost as cascading of tax, inter-tax will be weeded out.
Manufacturing will get more competitive as GST addresses cascading of tax, inter-state tax, high logistics costs and fragmented market b) Increased protection from imports as GST provides for appropriate countervailing duty.
The current 2% inter-state levy means production is kept within a state. Under the GST national market, this can be dispersed creating opportunities for others.