GST Bill : India’s Biggest Tax Reform

gst
Ongoing GST issue is very important in banking exam point of view in following way.
  • Direct questions in G.A. section
  • Group Discussion topic for SBI PO
  • Important topic for upcoming Interviews (SBI)
  • Important topic for descriptive paper for upcoming RBI mains exam
  • Important topic for Reading Comprehension for upcoming IBPS PO,RRBs exams
The Constitution (122nd Amendment) Bill, 2014 was approved by the Upper House with 203 votes in favour and none against.Six official amendments, including scrapping of one per cent additional tax, moved by the government were approved with cent per cent votes.The bill was passed by the Lok Sabha earlier. It will now go back to the Lower House to incorporate the amendments approved by the Rajya Sabha. The bill will also have to be approved by 50 per cent of all the state assemblies.Let’s see details about this.

What is GST

GST is being introduced in the country after a 13 year long journey since it was first discussed in the report of the Kelkar Task Force on indirect taxes.The Goods and Service Tax (GST) will be a comprehensive nationwide indirect tax on manufacture, sale and consumption of goods and services throughout India. The aim is to have one indirect tax for the whole nation, which will make India a unified common market.

Working of GST

GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.In other words, the prices that we pay for goods and services have the taxes embedded in them. Mostly, the consumers are not even aware of or ignore the tax they pay for things they buy.This is because there is a maze of indirect taxes such as sales tax, excise and VAT, which leads to increased complexity. The GST seeks to untangle this and subsume all in one single tax, thereby making India an economically unified market
  • Central level taxes : Central Excise Duty, Additional Excise Duty, Service Tax, Countervailing Duty, and Special Additional Duty of Customs
  • State level taxes : State Value Added Tax/Sales Tax, Entertainment Tax, Central Sales Tax, Octroi and Entry tax, Purchase Tax, Luxury tax, and Taxes on lottery, betting and gambling

Benefits of GST

  • Amalgamating several central and state taxes into a single tax will mitigate cascading or double taxation, facilitating a common national market
  • This would be beneficial for consumers as the tax burden on interstate logistics will be cheaper
  • A common tax would mean easy compliance and uniformity of tax rates and structures for industry and would thus contribute to ease of doing business by removing cascading costs
  • For central and state governments, GST is expected to 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
  • GST is expected to decrease the cost of collection of tax revenues of the Government, and will therefore, lead to higher revenue efficiency

Highlights Of Bill

  • Parliament and state legislature have concurrent power to make law about GST
  • Alcohol for human consumption has been exempted from purview of GST. GST will apply to five petroleum products on later date
1) Petroleum crude
2) High speed diesel
3) Motor spirit (Petrol)
4) Natural gas
5) Aviation turbine fuel
  • GST council will recommended rate of tax,period of additional levy tax,GST council will consist Union Finance Minister,Union minister of state for revenue and state finance minister
  • Parliament may, by law,provide compensation to the states for any loss of revenue from introduction of GST to five years period

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