GST

Goods and Service or simply GST has been in the news and on the minds of people from past few years in India. So what exactly is GST and what are its implications, how would it impact the lives of people and the Indian economy. Goods & Service tax is basically a form of an indirect tax that brings together most of the taxes that are imposed on various goods and services under a single tax system. Currently in India various taxes are levied discretely on goods and services. Introduction of GST would be an important step in history of indirect taxation in India.

Integration of various central and state taxes into a single tax system would simplify trade and commerce; also it would make the work of administration easier and simple. Implications of GST would lead to reduction in the overall tax burden on the consumers as it the consumers who consume the goods and services. A committee headed by Asim Dasgupta was formed by the NDA government in the year 2000 to prepare the layout for GST and its implementation. P Chidambaram, then the Finance minister of India while presenting the central budget for the year 2006-07 announced that GST would be introduced from 1^st April 2010. He also said that the empowered committee of state finance ministers would work with the central government in framing out a procedure or plan for implementation of GST in India. In the present situation Constitution Amendment Bill to introduce GST has been passed in the lower house of the Parliament, the Lok Sabha but is still pending in the upper house, the Rajya Sabha.

For the implementation of GST, the Constitution Amendment Bill on GST has to be passed by two-third majority by both the houses and once it has been passed, it needs the approval of more than half of the twenty nine Indian states. The bill is pending in the Rajya Sabha as some few changes are required in the bill and most of the states are not in support for the current bill. At present different types of taxes like sales tax, value added tax, service tax etc. are levied upon business and individuals, implementation of GST would eradicate above mentioned taxes as there would be a single tax system.

More than 100 countries around the globe have implemented GST.

It would reduce the burden of taxes on producers and stimulate the growth in economy. Manufacturing has become expensive under the current taxation policy where the manufacturers pay different kinds of taxes. GST would make the work of administration more transparent as different types of taxes that people have to pay would be reduced or get reduced. It would help in better willingness and flexibility in the revenue system. It would result in a simple, clear and easy tax system.

Few critics and intellectuals have argued that implementing GST would have an adverse impact on the lives of people who have low income as tax would consume higher proportion of their income in comparison with the people earning very high income. Certain products like fossil fuels (petrol, natural gas, kerosene etc.), products containing alcohol and electricity would not be included under GST.

Overall GST brings in more assistance than loss to society.     

Akshay Raina