(Indian Express) GST to be a boon for Consumers
Passing of Constitution Amendment Bill, 2014 in Lok Sabha will facilitate implementation of the goods and services tax.
- It will cut the cascading effect of several levies and allow industry to take benefit of taxes already paid thereby bringing down cost to consumers.
Journey So Far | Road Ahead |
---|---|
In budget 2007-08, P Chidambaram announced the implementation of GST from April 1, 2010 | The bill has to be passed by two-thirds majority of the Rajya Sabha as well, where the government does not enjoy a majority. |
The deadline is missed as no consensus could be achieved on the Constitution Amendment Bill | Following the passage in the Upper House it has to be ratified by 50 percent of states. |
Another deadline of April 1, 2012 announced | After ratification, the centre and states have to pass GST law, which will provide the framework for the new tax. |
Opposition-ruled states refuse to budge from their demands of fiscal autonomy and the second deadline is missed too. | A GST council will be formed which will decide on issues including tax rates, exemption list and threshold limit among other things. |
The BJP-ruled government in 2014 sets a new deadline of April 1, 2016 | IT infrastructure has to be readied before April 1, 2016, for making the new regime operational. |
Bill is introduced with some changes in December 2014 | |
Bill passed in the Lok Sabha on May 6, 2015, where the government has majority. | |
Consuming States | Manufacturing States |
GST will be levied on buyers of good & services, or where the services is consumed. | |
So big consuming states such as UP, WB, & Kerala could get a high share of the taxes ---- | ---> at the expense of manufacturing states such as Gujarat, Maharashtra or TN. |
To compensate for this, the bill provides for 1 % points extra tax on goods for at least 2 yrs. | |
This extra revenue will go to the state from which the goods is deemed to have originated, or where it was originally manufactured. | |
Controversial Points | |
* Instead of the proposed 1% additional levy for 2 years, manufacturing states want 2% additional levy beyond 2 years. | |
* Some states are worried over the reduction of the pool size due to additional 1% promised to manufacturing states. | |
* Few states like WB want tobacco to be outside the purview of GST. | |
* Original concerns like keeping purchase tax and entry tax in lieu of octroi outside the GST, taxation of petroleum, period of compensation for probable losses on account of implementation of the new indirect tax regime among others, remain |
Art. Ref. : Biggest tax reform: All you wanted to know
7th May 2015
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