Rajya Sabha on Wednesday finally cleared long awaited Goods and Services tax Constitutional Amendment bill. The bill had already been approved by Lok sabh last year.
The main objective of GST is to eliminate excessive taxation levyied by government. Many developed nations tax the manufacture, sale and consumption goods using single, all-inclusive Tax- GST.
Finance minister, Arun Jaitley said “The GST bill will empower the states, will increase revenue of states as well as Centre. It’ll ensure that there is no tax on tax”.
Check out Major Features of the Constitution (122nd Amendment) (GST)Bill, 2014:
- GST will Subsume various Central indirect taxes and levies such as Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty commonly known as Countervailing Duty, and Special Additional Duty of Customs
- It will also Subsume 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.
- GST will be levied on all goods and services, except alcoholic liquor for human consumption. Petroleum and petroleum products shall be subject to the levy of GST on a later date notified on the recommendation of the Goods and Services Tax Council.
- Creation of Goods and Services Tax Council will examine the issues relating to goods and services tax and will make recommendations to the Union and the States on parameters like rates, taxes, cesses and surcharges to be subsumed, exemption list and threshold limits, Model GST laws, etc.
- The Council shall function under the Chairmanship of the Union Finance Minister and will have all the State Governments as Members.
Who will gain what?
Government: Government will get Higher tax revenues owing to lesser evasion and wide tax base. It makes it easier to administer taxes and there can be a decline in cost of tax collection.
Consumers: There will be transparency in taxes. Taxes on services may go up causing inflation but taxes on good will come down.
Businesses: There will be reduction in compliance cost and disputed, protection from cheaper imports and will lower the incidence of tax as cascading ends.
Economy: There will be boost to investments via cheaper capital goods. Manufacturing will become competitive, boosting ” Make in India”. One market, one tax may add up to 2% to GDP.
If it is not rolled out on 1st April 2017, The government can roll out GST anytime in next fiscal year.