“FOR_ASPIRING_MANAGERS”-THE_BUSINESS_COLUMN

The Most Anticipated Tax Reform

The most awaited event in India had just happened recently on 3rdAugust, 2016. The Rajya Sabha has finally passed the GST (Goods and Services Tax), Constitutional Amendment Bill after a 7-hour long debate. This is something the Indian Citizens have been waiting for since decades.

Developed nations have already inculcated this kind of tax regime, now its India’s turn. Usually in this kind of tax regime, the manufacturer, the middlemen and the consumer are taxed using a single comprehensive tax, helping the nation in reducing the excessive taxation. “NO TAX ON TAX” is the main objective of the introduction of GST Bill.

Now at what rate will the GST tax be? Rajya Sabha had agreed to pass the bill only at the 18% or below and not above that. The GST rate is expected to be around 14-16 per cent. At present, 10 per cent is levied on services and the indirect tax on most goods is around 20 percent.

GST can be considered as one of the biggest indirect tax reforms in the history of India. It is aimed at replacing all the indirect taxes on goods and services, once it is implemented. It also helps in making India one of the strong markets to do business in. Instead of paying tax at different levels, tax will be paid once at the consumption level.

The study conducted by National Council of Applied Economic Research (NCAER) found that the execution of the proposed GST Bill could enlarge India’s progress of gross domestic product by 0.9-1.7 percentage points. By confiscating the structure of compounded Central and State taxes, the GST can help in restricting unnecessary taxation and filing costs, helping businesses magnify profitability and revenues, thereby enticing investments and endorsing GDP growth. Simplification of tax customs can help in increasing tax compliance and increasing tax revenues.