Significance Of Goods And Service Tax Bills

Need:

Indian indirect tax scene is today mired in a deluge of taxes. Hence, the way forward meant that there had to be one umbrella under which all these taxes could be absorbed such that the end user is not burdened by unnecessary administrative hassles. This would also translate into reduction unnecessary administrative costs being borne by the government. This bill has been a hot topic of contention in the various circles of power and bureaucracy. However, this has not been able to see the light of day because of political disagreements and the original bill having lost much of its true colour in order to bring all the states to agreement on this.

Importance:

The introduction of GST would mean that service tax, excise and customs duty would all come under one umbrella. A GST council comprising the state finance ministers and the union ministers for state revenue and finance will be formed. This council will determine periods and rates of tax and additional levy along with special provisions for certain states and principles of supply.

Issues:
 
Presently, the bill is in limbo since the Rajya Sabha where the ruling government is not strong and has primarily been stalled by the original architects of the bill the congress party. The bill has lost much of its lustre due to the politics involved and is far from an ideal GST as is prevalent in most countries across the globe:
 

  • Five petroleum products will see a levy deferment.
  • The bill at present enables the imposition of an additional levy of 1% for up to 2 years or more on interstate sale of goods. This revenue is set to go to states from where the supply originates.
  • Tax compliance and administrative burden may not really ease since the government will levy GST on interstate commerce.
  • The parliament as well a state will have mutually exclusive rights on determining tax rates. This will mean that central rules will not over ride those of states. Further, a concept of integrated GST would mean that the centre would have exclusive rights to levy GST on interstate sale which currently is not so crisp.


GST is applicable on all goods and services supply and provision except alcohol for human consumption. This was easily expected since the states would not want to lose major revenues generated from this source.  The need for GST is dire. However, the bill leaves a lot to be desired for. However, the good is the set off excise VAT and sales tax across platforms. However, taxes like octroi and such other taxes will remain.

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