Understanding GST and Its Benefits
Jun 01, 2017 Home Trading Steps
Finance minister, Arun Jaitley, has moved four Goods and Service tax (GST) bills in the Lok Sabha recently. Both the state and centre has come forward and supported the GST council. Finance Minister has called it revolutionary steps which will benefit all the citizen of the country. Explaining it further, the minister said that 12 council meeting were held to make the GST process based on consensus and recommendation.
It is regarded as one of the most ambitious indirect tax reform that the country has witnessed. And it is likely to roll on from July 1, 2017.
Goods and Service Tax (GST):
The Goods and Service Tax will replace nearly dozen of central and states levied taxes on goods and will have a single nationwide sales tax. This will help in the movement of goods and products across the country seamlessly and with cheaper taxes. It will be far simpler than the current taxing system in which the goods are taxed multiple times at different rates.
There will be four different tax slabs: 5, 12, 18 and 28 percent. Extra tax will be levied on luxury items like cars, tobacco and aerated drinks to compensate the states for any revenue loss for the five years. The GST council is yet to decide which good falls on which tax slab. It is expected that the GST will remain on the lines of the proposed tax slabs. To keep inflation under control, the essential items like food, which currently make up roughly half of the consumer inflation basket, will be taxed to zero.
Economic impact:
According to Finance minister, Arun Jaitley, GST can boost the economic growth by two percent points. Greater tax compliances have the potential to boost the revenues for the government, allowing to help narrow Asia’s widest budget deficit. It will help to allocate more funds to the schools and in the building better infrastructure of the country.
Impact on the businesses:
The business houses will have to put in one time investment to change their accounting system. For a short period of time, it is expected to have chaos while the government updates their systems to the proposed GST system. Until last week, the government has trained 49,000 officers of state and centre, to get familiar with the new accounting system. To help business houses help file their taxes, the Goods and service tax network (GSTN), which is the IT infrastructure arm of GST, and CBEC will together conduct training and workshops for them.
It is expected that the logistic companies will be benefited the most with the GST bill.
It is regarded as one of the most ambitious indirect tax reform that the country has witnessed. And it is likely to roll on from July 1, 2017.
Goods and Service Tax (GST):
The Goods and Service Tax will replace nearly dozen of central and states levied taxes on goods and will have a single nationwide sales tax. This will help in the movement of goods and products across the country seamlessly and with cheaper taxes. It will be far simpler than the current taxing system in which the goods are taxed multiple times at different rates.
There will be four different tax slabs: 5, 12, 18 and 28 percent. Extra tax will be levied on luxury items like cars, tobacco and aerated drinks to compensate the states for any revenue loss for the five years. The GST council is yet to decide which good falls on which tax slab. It is expected that the GST will remain on the lines of the proposed tax slabs. To keep inflation under control, the essential items like food, which currently make up roughly half of the consumer inflation basket, will be taxed to zero.
Economic impact:
According to Finance minister, Arun Jaitley, GST can boost the economic growth by two percent points. Greater tax compliances have the potential to boost the revenues for the government, allowing to help narrow Asia’s widest budget deficit. It will help to allocate more funds to the schools and in the building better infrastructure of the country.
Impact on the businesses:
The business houses will have to put in one time investment to change their accounting system. For a short period of time, it is expected to have chaos while the government updates their systems to the proposed GST system. Until last week, the government has trained 49,000 officers of state and centre, to get familiar with the new accounting system. To help business houses help file their taxes, the Goods and service tax network (GSTN), which is the IT infrastructure arm of GST, and CBEC will together conduct training and workshops for them.
It is expected that the logistic companies will be benefited the most with the GST bill.
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