GST Bill Passed: Here's What It Means
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The Rajya Sabha on Wednesday night passing the GST Bill. The Upper House of the Parliament voted unanimously in favour of the Goods and Services Tax (GST) Bill which was pending in the house since long. The Bill is one of the most important economic reforms in the history of independent India.
After this, the Bill is slated to head back to Lok Sabha for the ratification of amendments moved in the Upper House, followed by the next crucial step — a ratification of the Bill by a minimum of 15 states in their respective assemblies. This will have to be followed by the President’s assent to the legislation to enable the rollout of GST by the intended deadline of April 1, 2017.
Here’s how GST, that will be paving the way for what is referred to as the concept of 'one nation, one tax' differs from the current regimes and how it will work.
The shift in the GST regime will lead to a uniform, seamless market across the country. It will be a uniform rate, will check evasion, and boost growth rates.
Once GST is applicable there will be an inclusive tax that will replace current state-wise taxation regime. This means trader can buy or sell any goods or services from anywhere in the country and still pay the same the cost.
GST will be levied on both goods and services and will have two components keeping in mind the federal structure of India: the Central GST (CGST) and the State GST (SGST).
This will eventually lead to Central GST replacing central excise duty, additional duties on excise and customs, special additional duty of customs (SAD), service tax and cesses and surcharges on supply of goods or services.
The new GST regime will also subsume state taxes. Taxes such as VAT, central sales tax, purchase tax, luxury tax, entry tax, entertainment tax, taxxes on advertisements, lotteries, betting and gambling and state cesses and surcharges will be entailed.
Once GST comes into practice it will benefit as follows:
1) Will eliminate multiple taxes on firms, help ease of doing business.
2) Will reduce logistics costs for firms due to elimination of inter-State taxes
3) Capital goods prices could fall by 12-14% boosting GDP growth by 0.5%
4) Will reduce black money; need for financial documentation will increase