Sivasagar, Prangan Duarah: GST which implies for goods and services tax is considered to be one of the most important tax reform undertaken by the government in last two decades. GST is expected to be a game changer for Indian economy which will make our tax system simpler and will help to grow our economy in faster way. Now what is GST? How it will work and make our tax system simpler?
In simple word GST is meant to be a single, comprehensive tax which will subsume all other indirect taxes on consumption like excise duty tax, service tax etc. In India tax system can be broadly classified into two categories. One is direct tax and another one is indirect tax. Direct taxes are income tax, corporate tax, minimum alternative tax etc. Indirect taxes are sales tax, service tax, excise duty tax etc. GST is going to replace these indirect taxes from the system. There are a lots of problem in current indirect tax structure which include multiple layers of taxes which makes it extremely difficult to administrate, monitor and control. So, GST, which will subsume most of the indirect tax, is considered to be a solution to this indirect tax structure. So, in simple word multiple taxes like CENVAT, central sales tax, state sales tax etc will not exist anymore and will be replace by GST. But the direct taxes like income tax, corporate tax and capital gain tax will not be affected by GST. The proposed tax system will take the form of “dual GST” which is concurrently levied by central and state government.
This will comprise of Central GST which will be levied by central government and state GST which will be levied by state government. The main advantages of GST are it is expected to boost up GDP by 1-1.5%, India would emerge as single uniform market. Uniformity in tax rates/process across India. Easy movement of goods across state borders, central and state simultaneous levies taxes on goods and services , it will reduced tax burden on companies which will reduce production cost making and by reducing the production cost competitiveness of Indian products in international market is expected to increase and there by development of the nation. one of the major problem in India is corruption, this will be a step towards corruption free Indian Revenue Services. But there are two sides of every coin. Experts say that GST some state might lost revenue after introduction of GST. They also added that it would impact negative on the real estate market. It would add up to 8 percent to the cost of new homes and reduce demand by about 12 percent.
But most of the economist are very positive about GST implementation. Hope it will direct India towards positive development.