Why are we talking about GST Bill? GST Bill was passed in Lok Sabha on 6th May 2015. As an MBA Aspirant you should know why is it important? How will it affect a common man and the Indian Economy? Let us try and answer these questions here for you.
Background: Goods & Service Tax (GST) is a Value added Tax (VAT). It is being planned that, GST will replace all indirect taxes levied on goods and services by the Indian Government.
Need of GST Bill:
Currently Indian economy has various taxes on goods and services such as VAT, Service Tax, Excise duty etc. taken at various levels. Now as per the new proposed GST system; there will be only two taxes on all goods and Services as follows:
a. State Level GST(SGST)
b. Central Level GST (CGST)
What all will come under SGST and CGST?
It is planned that CGST will include the following taxes which were levied separately until now:
- Central Excise Duty
- Additional Excise Duty
- The Excise Duty levied under Medicinal and toiletries preparation Act
- Service Tax
- Additional Custom Duty (CVD)
- Special Additional Duty
- Education Cess and Secondary and Higher Secondary education Cess
SGST will imbibe the following State Taxes:
- VAT/ Sales Tax
- Entertainment Tax (unless it is levied by local bodies)
- Luxury Tax
- Tax on lottery
- State Cess and Surcharge related to supply of goods and services.
Main benefits of GST Bill:
- GST Bill will lessen down the disparity between taxes of different states.
- It might increase the revenue which Indian government gains through taxes.
- It will definitely help the common man by reducing the burden of multiple taxes.
- Tax administration and tax compliance will become far easier.
- If the benefits are passed on fully, for a common man, this could mean 25%-30% reduction in the prices.
Current draft of GST Bill has kept the Compensation clause in it which means, State governments will get compensation for 5 years for the loss they incur.
Overall, GST Bill is certainly a good and positive move. Hopefully it will get passed in both the houses of Indian Parliament and implemented soon for the greater good of the country people.