GST or the Goods and Services tax Bill reforms came into existence when India attained freedom in 1947. Since then, it has been in the limelight, up till now in 2016. However, since free India, ages have passed to bring it into force. It was supposed to get passed by this monsoon session of the Parliament, expected to pass on 1st April of the year but once again got blocked.
Initially, the UPA government, then reigning in 2009, became the first government to discuss and propose the GST Bill, though it failed to get it approved. Thereafter, in December 2014, the NDA government following the footsteps of the UPA government, made meager changes to the Bill introduced, which was further introduced in the Lok Sabha. And, finally on 6th May, 2016, it received green signal from the first house of the Parliament.
GST Bill if once passed would supersede the plethora of Indirect Taxes imposed with a single centralised tax. Mainly, it streamlines the process of taxation by categorizing all such taxes under one roof to make it easy and effective in the long run.
Clearance of the Bill would eventually be leading to economic integration of India. The major role of the Bill will be to transform India into a uniform market by weeding out all fiscal barriers. First and foremost, the single tax so to impose will act as a base and help in the removal of the Indirect tax system in our country. The current Indirect tax system includes overlapping taxes by the Centre and the State separately.
Stating about the framework of GST, it will be duly structured- Central GST and State GST as well as it will be proffering equal empowerment to the Centre and State. GST will provide a podium both to the Central and State GST. Both the Centre and the State will be in dominion of powers to legislate and administer in their respective fields.
Taxes such as excise duty, service tax, Central sales tax, VAT, octroi all are subsumed by the GST underneath a single umbrella. Basically, GST will be divided under 3 sub-heads namely Central, State and integrated.
After going through the minute details of the Bill it won’t be fictitious to say that GST Bill must have crossed many barriers intruding in its way to its implementation. But as of now, the prime hurdle it has to face is get majority of 2/3rd from the Lok Sabha and the Rajya Sabha together and 50 percent of the state assemblies as well.
The issues raised by the opposition parties may be taken into consideration for making the bill more effective. Congress is demanding reforms in the key areas of the bill. Mainly there are 3 concerns of the party. Firstly, a cap on the GST rate at 18 per cent; secondly, deletion of the provision which allows imposition of 1 per cent tax by additional levy, and an independent dispute resolution mechanism.
The impact of the bill holds many advantages. It will open a number of gateways for the economy in the near future. It is instrumental in the growth of GDP leading up to a rise of 2 percent. By breaking the Indirect tax system, it offers multiple solutions to multinationals and other Companies who wouldn’t be burdened to pay innumerable taxes as it would be replaced by one and only tax.
Along with the benefits to be incurred, risk of bill failure also must not be ignored and taken into account. The disadvantages of the bill should be anticipated in advance although they aren’t many.
One such drawback of the bill is fear of losing its powers. Some states are afraid of losing their fiscal powers at hand. To their relief, Constitutional amendment bill has promised to give compensation packages for 3 years if any revenue loss is incurred.
Another disadvantage is profit earned on export of petroleum products. For escaping from this, states should continue levying sales or VAT tax on petroleum products except on imports and inter-state.
GST Bill has not covered all the hurdles yet but is close to the motive behind its formation. To some extent, it has cleared some obstacles and that’s quite clear from the fact that it has been passed by the Lok Sabha. With its enforcement, the levels of fiscal deficit in the economy will lower and India will gain $15 billion a year because function of the bill will be to promote exports, create employment opportunities and boost growth.
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