Wednesday, July 27, 2016

GST Constitutional Act 2016

GST..! the name buzzing around the minds, States and specially Markets!!!

What is GST! Why is it so Loud! What is in it for the Common Man!

Here we go, to walk through the Act.

The Goods and Services Tax Bill or GST Bill officially known as The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014, proposes a national Value added Tax to be implemented in India. A simple comprehensive Tax, to be particular Indirect Tax on Goods and Services levied for the Value Addition on the Good and Services brought as a replacement for Taxes Levied by the Central and State Governments at each level as their discretion.

'Goods and services tax would be levied and collected at each stage of sale or purchase of goods or services based on the input tax credit method. This method allows GST-registered businesses to claim tax credit to the value of GST they paid on purchase of goods or services as part of their normal commercial activity.'

The catch here being, Taxable Goods and Services are not distinguished from one another and are taxed at a single rate in a supply chain till the goods or services reach the consumer. Supply chain, terming the life of a Good or Service from the point of existence till consumption or service.

As stated by pro's, GST would help in clubbing the State and Central level taxes to a single factor reducing the stress on Tax calculation and complex understanding of the structures at different levels and would simplify the facilitation of Single Common Market concept, also helping the de-burdening of the tax on goods which is currently estimated to be around an average of 25% overall.

There are many features of the GST Act, which we would refrain from feeding into our brains for now :)

How it started and where are the roots!!

The thought to introduce a national-level Goods and Services Tax (GST) by April 1, 2010 was first mooted in the Budget Speech for the financial year 2006-07. This responsibility was headed through preparing a Design and Road Map for the implementation of GST was assigned to the Empowered Committee of State Finance Ministers (EC). The committee released its First Discussion Paper on GST in India on the 10th of November, 2009. Dr. Nandan Nilekani has also played an empowered role in development of IT(information Technology) systems for GST.

One most accepted reason for the delay being the ambiguity on the sharing of burden between States and Central. The Goods and Service Tax Bill or GST Bill, officially known as "The Constitution (122nd Amendment) Bill, 2014", would be a Value added Tax (VAT) to be implemented in India, from April 2016, which we believe would be effective from July, 2016.

India is not the only country implementing GST, India is among the flock consisting Australia, Canada, Hong Kong, New Zealand, Singapore, United Kingdom(then)

Important catch being, may be a tribute to the legendary, The Rocket Man! Dr. Avul Pakir Jainulabdeen "A. P. J." Abdul Kalam remembering people's president, the GST Constitutional Act Amendments is approved by Cabinet(India) on 27th July.

*Disclaimer - Opinions expressed for knowledge share only. Not to be offended.