Goods & Service Tax - Revolutionary Indirect Tax Reform

Abstract

Today, the Constitution (One Hundred and First Amendment) Bill, 2015 passed in Rajya Sabha.

The Constitution (122 Amendment Bill), 2014 has passed by the Lok Sabha on May 6, 2015. It would referred to a select committee of Rajya Sabha which submitted its report on July 22, 2015.

The Empowered Committee considered the GST as "a further significant improvement - the next logical steps - towards a comprehensive indirect tax reforms in the country."

Indirect Tax Reform -The GST (Goods&Service Tax ) is a destination based taxation. The GST will herald an economic integration of India. It would facilitate a common national market. It would give positive impulse in the Nation's GDP double digit growth prospect. With the introduction of GST, India is set to face the biggest tax reform since its independence. It would expect to overhaul India's indirect tax structure by simplifying tax compliances, reducing tax costs, eliminating double taxation and enabling the seamless flow of credits across manufacturing, services and trading sectors. The Introduction of GST will provide a much needed impetus to the Indian growth story.

The GST Bill proposed a dual GST model. GST that would levied by the Centre would be called Central GST (CGST) and GST charged by States would be called State GST (SGST). A "goods and service tax levied on the supplies in the course of inter - state trade or commerce " (Formerly known as IGST) would be issued on inter- State transactions of goods&services.

The GST would subsume most of the existing Central and State taxes on the supply of goods&services including central excise, service tax, state level VAT and other local levies on goods.

The idea is to confer concurrent power upon the Parliament and the State legislature to make laws governing GST.

The GST Bill pinpointed the loopholes in the present tax structure which result tax on tax in the chain of supply from manufacturer to final consumer. Multiple taxes imposed by different States and the Central Government not only increase product prices but also give enormous scope of tax evasion.