It seeems Demonetization is not the biggest economic reform happeed in India. One more surprise is waiting for us. This time we are going to feel it more deeply. Well I’m talking about GST reform. GST a.k.a Goods And Service Tax bill with a tagline ‘one nation, one tax’.
Here are some basic ideas and my opinion on GST:
GST or Goods and Services Tax is the biggest tax and economic reform in the history of Indian Economy. It is a system of indirect tax to all over India to replace the traditional tax systems. Earlier indirect taxes used to levied by state abd central government differently. But, now with the introduction of GST citizens will be charged a single tax throughout India.
The GST is governed by GST Council and its Chairman is Union Finance Minister of India Shri.Arun Jaitley. It is expected to be applicable from 1 July 2017.
GST has been implemented in almost all over world years ago except USA. India is among those countries who migrating into GST in late. Looking to the already migrated countries it can be conclude that GST is a simpler and single form of tax collection and makes it very difficult to evade taxes. It’s like another surgical attack on corruption, this time as tax reform.
Expected Fall or Rise in prices for common man:
Prices of these products may get cheaper-
- Two wheeler,
- Entry level cars,
- Dining in resrurants,
- Movie tickets in some states,
- washing machines,
Prices of these products expected to get higher-
- Mobile Bills,
- School fees,
- House rent,
- cigarettes, Pan masala & other tobacco,
- Aerated Beverages,
- premium for insurance policies,
- Online ticket booking,
- DTH services.
Three types of GST:
GST tax system is divided into three categories as it deals with all over country uniformly. And there exist inter state and intra state transactions, All comes under GST in different categories. Those are
IGST: where the revenue will be collected by the central government for inter-state sales
SGST: where the revenue will be collected by the state governments for intra-state sales
CGST: where the revenue will be collected by the central government.
What will be the Prices after GST:
Of course there will be changes on prices of goods, GST will definately affect everyones budget with some goods or services will be cheaper where some will be more expensive. The GST Council has divided the tax ratio in four broad categories i.e., 5 percent, 12 percent, 18 percent and 28 percent. Nevertheless, some items like Gold and Rough diamonds have exclusive tax rates. Furthermore, some items have been exempted from taxation.
Who fall under GST:
Every business firm deals with goods or services with a turnover of more than 20 lacs except northeast states where 10 lacs applicable, are fall under GST. Other cases includes Transactions carried on between different states also fall under GST irrespective of turnover limit.
Furthermore, all e-commerce portals also fall under GST, and the persons who supplies goods or render services through e-commerce, fall under GST but not under Income Tax Act.
To adopt and to migrate into new GST system will be definitely tough and will take time to understand the whole system of tax calculations and filling.
Those who fall under GST will face some or other difficulties, especially the small scale businesses. The return filing system of GST is quite complx and confusing. One has to file 3 times for one product. Once while purchasing, then while selling and again for matching the both.
Some economists predicted that GST will negatively impact the real estate sector. The price of new homes may raise and demand may fall.
Hence GST is yet to implement, this is just a rough idea of what should happen after implementation of GST bill. There’s some confusion over prices and system of tax collection which needs time to understand as this bill is full of confusion and complexity.