The Union Budget 2017 that was introduced by Arun Jaitley on 1st February 2017 stated that the GST bill is to be implemented from 1st July 2017. Both the central and state government have signed an agreement in order to commence the implementation of GST. Though in its initial years post demonetisation, GST will be difficult on the operation form, but here the future is being considered. Thus, even though a tough stride has to be taken to maintain the GST reform initially it will help generate excellent revenues in future. Thus the fiscal year 2017-18 is very crucial with the advent of GST bill.
What is GST?
GST stands for Goods and Services Tax. The GST bill was to be launched long back in April 2014, but since it faced opposition it will finally be levied from 1st April 2017. The GST bill is the 122nd amendment of the constitution which will bring one of the largest economic waves in the country. The bill states that every state, region and district in India will follow a common taxation structure in case of goods, products and services delivered. This will lead to the demolition of other taxes like state level service tax and state level VAT( Value Added Tax). This unification in taxation system will ensure a stable economic system and will completely abolish corruption in market transactions.
What other changes will be seen in the constitution on the issue of GST bill?
With the 122nd amendment being issued an Article will be added in the constitution stating that the right to legislating GST will lie with the Central and the State Governments.
What is the governing body responsible for GST framing?
A governing body known as GST Council will be formed to legislate the GST. The chairman of this council Finance Minister at the Central level and the State Finance Minister at the State level. At State level, there can be changes as per nominated by the State Government. The other ministers who will be part of this council will be nominated from the Finance department at both Central and State Level.
What is the framework for implementation of GST?
The GST is divided into two parts: The State Goods and Services Tax (SGST) and the Central Goods and Services Tax (CGST). Both SGST and CGST will be simultaneously levied for market transactions. The Central Government will be responsible for collecting the CGST and the State Government will be responsible for collecting the SGST.
How will the CGST and SGST be decided?
The GST Council will be responsible for taking all decisions regarding levying GST at both Central and State level. They will be reviewing the market rates of all the products and applying the unified tax rates on all goods and services. The GST council may also decide to waive taxes on certain goods and change the uniform rates based on their discretion.
What are the exceptions to GST scheme rule?
All alcoholic liquor will not come under GST and will be exempted from the taxes levied by GST. Also, non-renewable fuel resources will fall under varied rates as decided by the GST council. They will not be subject to the unified rate.
How will GST function in case of the Inter-State trade framework?
In the case of inter-state trading, an additional 1% tax will be levied apart from the GST. This tax will have to be paid for demand and supply of goods.
What if a State incurs heavy losses under the GST Scheme?
In the case of major losses incurred by any State under the GST Scheme, the Council will compensate for the losses by paying the lost funds to the State for a duration of 5 years.
What will be the positive results of issuing GST?
The economic worth of a country is defined by its GDP rate. This system of unified taxation would mean a complete transparency in market taxation systems and an equality as far as economic gains due to taxes are concerned. This would also mean better trading systems as GST will affect the export of goods. As a result, an increase in GDP will be seen. Thus the stability of economic system will be retained, giving a profit turnover of over 10 billion dollars in India.
What will be the CONS of GST system?
The GST will be issued in accordance with the global market taxation scheme. The global range of taxation is 14% to 22%. Thus the average range is seen to be between 18%-20%. So the GST issued will levy an 18% tax on all goods, products as services. While this will maintain uniformity, certain tax values which were originally low will now rise.