The long awaited Goods and Services Tax (GST) bill was tabled in the Rajya Sabha today. This is particularly significant since Ease of Doing Business is high on the centre's agenda. The GST will go a long way in simplifying taxes in India, creating a unified Indian market and create for procedural simplicity.
Here we get a refresher on the GST and what it means for India.
What is GST?
The GST is a composite indirect tax for both goods and services for the entire country. At present, indirect taxes consist of excise duty, service taxes and customs duties. Further, there is state level variation in indirect taxes charged as well in terms of State VAT. Overtime, the GST is expected to subsume all these taxes so that there is a single indirect tax.
What are the advantages of GST for business?
Business can expect a number of benefits with the introduction of GST, like simplified payment of taxes and filing of tax returns, for one. Also, SMEs with turnover under Rs. 50 lakh might not have to pay GST. Moreover, it will bring in uniformity in rules for input tax credits and sales VAT at the central and state level. Overtime, the GST is expected to create a more business friendly environment, since price levels and hence inflation can come off overtime as a uniform tax rate is applied. Also, the government’s fiscal health is likely to improve overtime as the tax collection system becomes more transparent, making tax evasion difficult.
Where is India on GST implementation at present?
A number of delays have taken place in building consensus on the details of GST, including objections raised by State governments, and more recently at the centre. Nevertheless, steps towards the GST have been taken, which could start impacting business in times to come. The draft legislation is under process, as is the setting up of a website for filing of return and payments for all states. The Permanent Account Number (PAN) card is expected to be the common link in filing both direct and indirect taxes.
Here we get a refresher on the GST and what it means for India.
What is GST?
The GST is a composite indirect tax for both goods and services for the entire country. At present, indirect taxes consist of excise duty, service taxes and customs duties. Further, there is state level variation in indirect taxes charged as well in terms of State VAT. Overtime, the GST is expected to subsume all these taxes so that there is a single indirect tax.
What are the advantages of GST for business?
Business can expect a number of benefits with the introduction of GST, like simplified payment of taxes and filing of tax returns, for one. Also, SMEs with turnover under Rs. 50 lakh might not have to pay GST. Moreover, it will bring in uniformity in rules for input tax credits and sales VAT at the central and state level. Overtime, the GST is expected to create a more business friendly environment, since price levels and hence inflation can come off overtime as a uniform tax rate is applied. Also, the government’s fiscal health is likely to improve overtime as the tax collection system becomes more transparent, making tax evasion difficult.
Where is India on GST implementation at present?
A number of delays have taken place in building consensus on the details of GST, including objections raised by State governments, and more recently at the centre. Nevertheless, steps towards the GST have been taken, which could start impacting business in times to come. The draft legislation is under process, as is the setting up of a website for filing of return and payments for all states. The Permanent Account Number (PAN) card is expected to be the common link in filing both direct and indirect taxes.
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