Goods and Service Tax is meant for creating a system of indirect taxation to get rid of multiple taxation of goods and taxation at varied strata. This tax has been proposedin order to combine the various taxes from state and central government and levy an integrated tax that could account for all of these.
Salient features of GST structure:
- There would be four slabs of taxation; 5 %, 12 %, 18 % and 28 %. The guidelines for the products and services being put under a slab will be decided according to the proposals of the council.
- All food items would be put under a separate slab of zero percent taxation under the bill. The proposal also aims at putting about 50 percent of the consumer products under the same taxation module.
- Most of the consumer items that could not qualify for the zero taxation guidelines would be put under 5 % taxation. This includes soaps and cosmetic products.
- The council has also passed a cess over the taxation slab of 28 %. This cess would be charged for luxury items like luxury cars, aerated drinks and tobacco products.
- The cessis introducedin order to fulfill the revenue loss to the state exchequer because of the abolition of multiple taxation.
Benefits of GST
GST has been branded as one of the most influential steps by the central administration towards making the taxation structure more accountable and fair. Below are some of the major advantages that come along with this bill.
- The replacement of 17 indirect taxes with a single tax would lead to asharp decrease in compliance costs.
- As the amount of taxation would be seen as decreasing, the citizens would feel more willing to submit their taxes. This would keep control over the issue of tax evasion.
- The cost of final products in the retail markets is higher than the manufacturing costs because of the multiple taxations. GST has the ability to bring these prices down by around 20 to thirty percent.
- As there won’t be any taxes at the state level for consumer goods, the availability of items would become uniform and create a better flow of goods.
- The speed of goods transfer will surely increase as the products being transported need not to queue at the state borders to pay state taxes anymore.
- The manufacturing regime would become more competitive as the manufacturers will have better taxation benefits.
- Manufacturing facilities will begin to be set in all the states instead of only the tax friendly states. This would mean cumulative development.
The gist of the idea behind GST is that it could help reduce the cost of the consumer products as well as encourage the manufacturers to go along the most honest path because of fair taxation.
The prices of the consumer items are most likely to take a dip after the act comes at full pace. This is a good sign for the business community as well as the consumers. It aims at catering to the dependent cycle of the service provider and the consumer.
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