Finally Rajya Sabha passed GST Bill on August 3, 2016. GST is one of the biggest indirect tax reform & will lead to economic integration of India. Now Its One Nation One Tax. The GST constitutional amendment bill was passed in the Lok Sabha in May 2015.
GST stands for “Goods and Services Tax”, and is a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level.
The main benefit of the GST is to facilitate a uniform tax levied on goods and services across the country. Currently, the indirect tax system in India has overlapping taxes levied by the Centre and the State separately. Taxes such as excise duty, service, central sales tax, VAT ( value added tax), entry tax or octroi will all be subsumed by the GST under a single umbrella.
Here are the 10 benefits of Goods & Services Tax (GST) for You & Indian Economy –
1. GST rollout will help faster and cheaper movement of goods across the country with a uniform taxation structure.
2. The consumer pays tax on tax already paid by the manufacturer. That is what makes the consumer higher tax, and in turn pay higher prices. With GST, this anomaly will be corrected, thus bringing down the end price.
3. Manufacturing will get more competitive as GST addresses cascading of tax, inter-state tax, high logistics costs and fragmented market. GST provides for appropriate countervailing duty & thus will provide increased protection from imports. Make in India will get a boost
4. Ecommerce will benefit. The issues of State restrictions and levies will end with GST.
5. GST will replace 17 indirect tax levies and compliance costs will fall. Also Input tax credit will encourage payment of taxes
6. GDP will rise. HSBC estimates an 80 basis point rise in GDP growth over 3-5 years, NCAER pegs this at 0.9-1.7%.
7. Less developed states will benefit as GST will make India one market & their products will not face 2% inter-state levy.
8. Due to trade barriers such as the entry tax, local body tax, Octroi and other hurdles, trucks idle for 30-40 percent of the day, leading to huge man-hour and fuel losses, says the Care Ratings report.
9. Since GST will be levied on goods transportation and full credit will be available on interstate transactions, logistic cost is expected to come down by 1.5-2 percent of sales due to warehouse optimization and the resultant lower inventory cost. Logistics industry is projected to grow at a compounded annual growth rate of 15-20 percent
10. GST if set at 18% will be lower than current 24-25 % tax on goods. But it will be higher than the current 15% effective tax on services. In short to medium term, services like air and train tickets, cellphones, hotels will cost more. But consumer goods manufactured in India are set to become cheaper.
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