It is quite some time now that we are getting to hear this phrase “GST in India” a bit too often. So rather than hearing to the numerous rumors or opinions on GST let us get some know how about GST.
What exactly is GST?
GST as elaborated, is Goods and Services Tax. It is one indirect tax applicable throughout India replacing multiple taxes levied by the central and state governments. GST is anticipated to be the biggest tax reform in India since 70 years of independence. As said by Prime Minister Mr. Narendra Modi himself “GST is a transparent and fair system that prevents black money and corruption and promotes new governance culture.”
No matter how much overnight it seems. Implementation of GST in India has not been so overnight. This biggest tax reform in India has taken its due course of time, oppositions, reconstruction. The idea of GST in India was first floated in the year 2000 by the then PM Mr. Atal Bihari Vajpayee. It was then taken ahead by UPA Finance Minister Mr. P Chidambram. In 2010, the then Finance Minister Mr. Pranab Mukherjee also advocated the GST roll out. Finally, in 2016 GST bill was passed in both the houses i.e.; Lok Sabha and Rajya Sabha and it was announced by PM himself that GST in India will be launched and consequently from the midnight of 30th June 2017.
GST’s effects on Indian Economy
GST in India is expected to be favorable to the economy in the mid-term and the longer term, however, very favorable results are not expected in the shorter term as the implementation process and getting accustomed to the new process all may take time. Few impacts that GST is expected to have on our economy are as follows:
- Simplification of a process for business owners – Under GST, business owners now need not worry about keeping a track of various taxes at different stages.
- Reduction of tax burden – The previous tax system levied double taxes which prevented many business owners from working to their optimum level. GST would provide a tax credit to manufacturers.
- Lower prices of commodities – A single taxation system would also mean lower prices of many commodities.
- GST in India is expected to boost the Indian GDP by 1-2%.
- Inflation rate now on is expected to stay low at least on essential goods.
- Black money circulation will be reduced as tax escaping will become next to impossible.
- By expanding the tax base, GST will add to government revenues.
What gets Cheaper and what gets Dearer
Many commodities will be affected by the implementation of GST in India, let us have a look at few of them.
- Cars – The dream of owning your own vehicle may now just be closer to reality. The excise duty on small cars has been cut from 16% to 12%; the excise duty on hybrid cars has been cut from 24% to 14%.
- 2 wheelers/3 wheelers – Even the small vehicle owners have something to be delighted about. The excise duty of 2 wheelers and 3 wheelers have been cut from16% to 12%.
- Consumer goods – Good news for all those who are setting up a household. 2% cut in excise duty on consumer goods like washing machines, refrigerators, air coolers and other durables.
- Medicines – The customs duty on specific medicines has been reduced.
- Economy class airfare/ low-cost clothes-shoes.
- Cigarettes and other tobacco products – In a well-appreciated move, cigarettes and other tobacco goods will now come with higher excise duty.
- Luxury personal care items – Grooming may also become a little pricier with the prices of deodorants, perfumes shampoos, creams etc going up.
- Ornaments – Gold jewelry and precious or semi-precious stones may also turn costlier as the tax rate for these is increased to 3%.
- Telecom services – Mobile phone bills and internet services pack will now get costlier.
- Online shopping/ insurance premiums/ bank charges.
Overall, GST in India is set to bring in our nation a revolution. With few essential objects getting cheaper and few luxurious things getting dearer it is going to be a new budgeting all together. Lower commodity prices will attract lower tax rate slab and higher prices of the same commodities will attract higher tax slab. However, GST is only for the betterment of the country and the better effects will be seen in time to come if not immediately. The crux of GST in India is as the title suggests “One Nation one Tax.”