Its been one of the most discussed topics to make and bring revolutionary transformation in economy and GDP of the country. This system will not only make tax payment lot easier and it will help government to bring maximum beneficial policies for welfare of the country as well.
On 29 March 2017, after passing bill from Lok Sabha clear this bill, the government announces to implement this revolutionary law with full effect from 1st July 2017 in across the country. This bill completely transforms entire tax system.
Lok Sabha approves important four integrated bills Union Territory GST Bill, Integrated GST Bill, Central Goods and Services Tax Bill or CGST Bill and Compensation GST Bill.
There are various policies and provisions have been included in this law to make it much effective and result oriented. As we know that if individual buy any product, then as per rules he/she need to pay multiple taxes, to remove this type of complication government is implementing this complicated process into single tax system.
Central Taxes GST is going to replace Service Tax, Central Excise Duty, Additional Duties of Excise and Customs, Special Additional Duty of Customs and other cess and surcharge that central government impose on customers. State Taxes GST is going to replace state surcharge, VAT Entry Tax, taxes on betting, lotteries, Purchase Tax and other cess imposed by state governments.
According to the finance minster of India, Mr. Arun Jaitely GST is going to bring special effect in controlling of inflation and other differences. In various product and services like electronics, cosmetics and beauty state government charges various types of taxes as per that particular state tax policy and rules. GST is going to remove all these complication and illusions. Another major benefit that individuals will get is freedom from extra burden of tax.
As per current tax system central and state government imposes tax on products and individuals to generate maximum revenue to launch new policies and continue previous ones to keep development continue. This tax system will not only boost Gross Domestic Product (GDP) but it will positively affect the government to make business process quite simple and tax system simple but effective. Government is planning to give exemption is agriculture and essential food products.
As per recent updates, compare to previous multi layered tax system, this tax system has been divided into four sections to reduce the ambiguity and under these categories tax rate will be 5%, 12%, 18% and 28% respectively. To do so reason behind all this is quite simple because as of now there will be different charges for daily needs product and luxury items. Apart from this there will be exemption on various products. Government is going to impose additional taxes on luxury products and will not going to impose any tax on petroleum and food products. As far as alcohol is concerned there is not any information about GST imposing on this product.
The newly formed CGST bill will make collection of tax quite simple and robust. As per latest rules if any state government faces and loss in revenue generation then central government is going to pay the remaining amount as recovery. To pay the compensation central government is not going to impose any additional tax.
As per policy of this bill, government will impose service tax between 5% to 18% on purchase of spices and packed salted products at the same time there will not be any tax agriculture and food products. Daily needs products like soap, toothpaste; oil and other products will be charged with tax rate of 12% to 18% with respect to current tax rate of 20% or more.
Luxury products like cards and other vehicles will be taxed up to 28% at the same time other products like air conditioner, washing machine and refrigerator will be taxed up to 28% compare to current tax rate of 30% to 31%.
Government is planning to set monitoring committee to take further call on any modification on tax imposing and monitor the current scenario and effect of GST in business and corporate sectors. It is possible that GST may not seem beneficial and effective for job oriented individuals who receive subsidy on purchase of daily needs products. So collect complete information about tax criteria and rate as per policy.
As per current scenario, GST is not perfect there are various positive and negative factors that make this bill not that much emphatic. Its not ideal condition to make any perception about this bill.