Indore: The country will add a new chapter in its indirect tax history, when President Pranab Mukharjee will roll out the new Indirect tax regime Goods and Service Tax (GST) by stroking a bell in the Central Hall of Parliament in mid-night of Friday (June 30) 2017. After a long period of 13 years, GST is going to replace over two dozen indirect taxes of central and state governments with its three variants —Central GST, (CGST), Integrated GST (IGST) and State GST (SGST) and four slabs 5 per cent, 12 per cent, 18 per cent and 28 per cent.
The introduction of the GST is a very significant step in the field of indirect tax reforms in India. By amalgamating a large number of central and state taxes into a single tax, GST will mitigate ill effects of cascading or double taxation in a major way and pave the way for a common national market.
From the consumers’ point of view, the biggest advantage would be in terms of reduction in the overall tax burden on goods, which is currently estimated to be around 25 per cent to 30 per cent. It would also imply that the actual burden of indirect taxes on goods and services would be much more transparent to the consumer.
The GST would also make Indian products competitive in the domestic and international markets owing to the full neutralisation of input taxes across the value chain of production and distribution. A large number of experts of economics have stated that this would have a boosting impact on economic growth.
Last but not the least, this tax, because of its transparent and self-policing character, would be easier to administer. It would also encourage a shift from the informal to formal economy. The Central government is going to introduce GST with effect from Saturday (July 1) 2017.
GST is a destination based tax on consumption of goods and services. It is proposed to be levied at all stages right from manufacture up to final consumption with credit of taxes paid at previous stages available as set off. In a nutshell, only value addition will be taxed and burden of tax is to be borne by the final consumer. The tax would accrue to the taxing authority which has jurisdiction over the place of consumption which is also termed as place of supply. GST is one indirect tax for the whole nation, which will make India one unified common market.