Goods and Services Tax(GST)[/b]
Currently, India hag multi-stage taxation: [/b]customs duty on manufacture of goods, central excise duty on manufacturing of goods and service tax on services rendered or received, which are levied by the Centre. Sales tax/ VAT on sale of goods are levied by state governments and taxes such as levied by the local municipality. Goods and Services Tax is a part of second generation tax reforms that centre round evolving an efficient and harmonized consumption tax system in the country so as to eliminate current parallel systems of indirect taxation at the central and state level. Goods and Services tax’s implementation has been formulated by the task Force of the 13th Finance commission, under the chairmanship of Aryind Modi, joint Secretary deptt.Of Revenue (GoI)
The rationale of introducing GST-[/b]GST is a multi-stage consumption based [/b]Value [/b]Added Tax (VAT) on goods and services. The introduction of GST is expected to expand the base of the tax and reduce distorictions by eliminating input taxes further. Advantages of comprehensive GST are:
1. Introduction of GST would result in abolition of multiple types of taxes on goods and services.
2. Reduces effective rates of tax to one two floor rates.
3. Reduces compliance cost and increase voluntary compliance.
4. Removes cascading effect[/b] of taxation and removes distortion in the economy.
5. Reduces litigation, harassment and corruption.
6. Will result in widening tax base and increased revenue to the Centre and State.
7. Reduces administration cost for the Government.
Basic features of the proposed GST:[/b]
GST shall have two components:
1. One levied by Centre (Central GST or CGST)
2. Other levied by states (state GST or SGST)
Characteristics of the rate structure [/b]
1. A lower rate necessary items and goods of basic importance.
2. A standard rate for goods in general, and
3. A special rate for precious metals and a short list of exempted items would also be specified.
Need for constitutional amendment and centre’s initiative-[/b]
Amendments to the Constitution will be necessary, for instance to enable the states to levy a service tax and the centre to tax goods beyond the factory gate.
[/b]
Currently, India hag multi-stage taxation: [/b]customs duty on manufacture of goods, central excise duty on manufacturing of goods and service tax on services rendered or received, which are levied by the Centre. Sales tax/ VAT on sale of goods are levied by state governments and taxes such as levied by the local municipality. Goods and Services Tax is a part of second generation tax reforms that centre round evolving an efficient and harmonized consumption tax system in the country so as to eliminate current parallel systems of indirect taxation at the central and state level. Goods and Services tax’s implementation has been formulated by the task Force of the 13th Finance commission, under the chairmanship of Aryind Modi, joint Secretary deptt.Of Revenue (GoI)
The rationale of introducing GST-[/b]GST is a multi-stage consumption based [/b]Value [/b]Added Tax (VAT) on goods and services. The introduction of GST is expected to expand the base of the tax and reduce distorictions by eliminating input taxes further. Advantages of comprehensive GST are:
1. Introduction of GST would result in abolition of multiple types of taxes on goods and services.
2. Reduces effective rates of tax to one two floor rates.
3. Reduces compliance cost and increase voluntary compliance.
4. Removes cascading effect[/b] of taxation and removes distortion in the economy.
5. Reduces litigation, harassment and corruption.
6. Will result in widening tax base and increased revenue to the Centre and State.
7. Reduces administration cost for the Government.
Basic features of the proposed GST:[/b]
GST shall have two components:
1. One levied by Centre (Central GST or CGST)
2. Other levied by states (state GST or SGST)
Characteristics of the rate structure [/b]
1. A lower rate necessary items and goods of basic importance.
2. A standard rate for goods in general, and
3. A special rate for precious metals and a short list of exempted items would also be specified.
Need for constitutional amendment and centre’s initiative-[/b]
Amendments to the Constitution will be necessary, for instance to enable the states to levy a service tax and the centre to tax goods beyond the factory gate.
[/b]