We look at FM Arun Jaitley’s pet project the GST or proposed Good & Services Tax, its implications and what it will mean to us

What is the Proposed GST or the Goods and Services Tax?gst1 WHAT IS GST?

  1. Finance Minister Arun Jaitley would have us believe that this is the single most important and significant tax reform in the county since independence – this is the proposed Goods and Service Tax (GST), a value added tax that the centre plans to introduce all over the country with concurrent implementation by the states and the centre.
  2. The reform is meant to follow the single GST tax regimes followed all over the world, which have proven to be the best and most effective.
  3. The understanding is that the amount of tax will be lower but the amount recovered by way of tax would actually increase because the number of assesses would increase – by 5 to 6 times according to some estimates. It is thought that increased buoyancy would help to increase tax collection even as rates decrease.
  4. The tax reform will boost growth and revenue significantly claims Jaitley increasing earnings for the state and the central exchequers. To get the states on board his grand design, the Finance Minster has assured the states that they stand to lose nothing. “We have made sure that no state will lose a rupee of revenue. It will be a win-win situation,” he was quoted as having said. (Source – Indian Express)
  5. India Inc is keen for the new GST to be put into place as well. this is because various different taxes such as taxes like octroi, CENVAT, central sales tax, state sales tax, entry tax, license fees, turnover tax will be brought under one single tax system. It will be charged at point of sale, will eliminate double charging and presumably provide relief to the end consumer. (Source – Money Control)
  6. The Finance Minister is keen to push the reform through before the states take political objections. We have to see if he is successful in this endeavor.

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