The whole of India was under the GST storm
when the Rajya Sabha had passed the GSTBill, 2014. Industry experts and
government officials had thought of the new proposed structure on an amalgamated indirect tax regime to endorse
the concept of ‘One Nation, One Tax’.
To unravel the impact of the bill across
different industries after it has been changed into law, it is absolutely necessary
to find out the differences with the current tax structure according to the structure of the GST and the different ways that the various tax components will operate for the various transactions of
goods and services.
Do
We Really Need the GST?
Yes,
we do, we will explore the logic and the rationale for the need of the GST.
The mid of 1980’s, saw the implementation of various indirect tax reforms,
although in a piecemeal manner.
It is undeniable that the reforms have
greatly transformed the different taxation system of the nation and have halted the cascading effect of tax-on-tax.
However, when it comes to implementation of new taxes the enterprise has been only partly successful.
The introduction of Value-added taxation in
the country can be traced back to 2005, and it conveniently replaced sales
taxes and it did cover across transactions and the sale of goods up to the point
it reached the retail stage.
The
Difference between Indirect Taxes and GST
The implementation of VAT ensured that each
and every person in the transaction chain does get a credit of all the taxes levied on
the previous purchases. However, this failed to stem let alone stop the cascading effect of taxes.
At the central level, CENVAT or Central value added tax was introduced in which credit of tax is paid on inputs and the capital
goods till the manufacturing stage; it does not
stretch to the distribution chain.Besides, it is not really feasible to truly
implement the VAT since all the goods and services are not taxable at the same
rate across the country.But GST is different in this respect as it
stops all this discrepancy as it differentiates
between goods and services; what it means that with the GST, tax evasion is not
possible by selling goods as services and you cannot get the undue benefit
out of it.
Additionally, what GST ensures that all the
transactions will be taxable at a uniform rate all across the country.
The GST will be implemented in the form of dual GST—the Central GST and State
GST levied by the Center and the state, respectively. The (IGST) or the component Integrated GST is
taxed by the central government on the various interstate
supply of goods and services.
Also, you will further notice that the new
framework will subsume almost all the indirect taxes under the purview of the center and regional states, which thankfully puts a stop to the different taxes on goods and services,
propagating the idea of one Nation, one tax. For more details about GST Bill India visit: http://www.vramaratnam.com/