With the promise of “One tax , One nation, One market.” Government introduced GST with certain tax slabs with any affect on the essential commodities.
There will be the launch of most sweeping tax reform, GST. Government decided to introduce a tax in unison of the 29 states of the country. This is an introduction to a big leap in the country. GST will help-widening the coverage of tax base and improve tax compliance.
What is GST
Goods and services tax is meant to be a unified indirect tax across the country on products and services. In the current system, tax is levied at each stage separately by the Union government and the States at varying rates, on the full value of the goods. But under the GST system, tax will be levied only on the value added at each stage. It is a single tax (collected at multiple points) with a full set-off for taxes paid earlier in the value chain.
IMPACT ON CONSUMERS
The tax of incidence will be faced by the consumers ultimately. The consumers will be at a loss in the short run.
“The customers will not have to pay tax for essentials like alt, eggs, milk, buttermilk, curd, natural honey, fresh fruits and vegetables, flour, , fresh meat, fish, chicken, palmyra jaggery, hulled cereal grains, unbranded and unpackaged tea and coffee, vegetable oil, children’s’ colouring books, muddhas made of sarkanda and phool bahari, jhadoo, jute, kajal, bindi, sindoor, bangles, handloom, stamps, judicial papers, printed books, newspapers, unbranded dried leguminous vegetables, uncarded or uncombed wool, Gandhi topi, khadi yarn, coconut, coir fibre, unspun jute fibres, Indian national flag, Puja items, prasad, contraceptives, hotels and lodges with tariff below Rs 1,000, education and healthcare services will have no tax slabs.There are also items wherein the tax is just 5% which includes the items such as medicines,coal, kerosene,cashew and lifeboats.Consumers will be free from the fear of double taxation.”
IMPACT ON SELLERS
Introduction to the new tax reform will bring about a huge change in the whole market. The sellers will ensure that there is no tax evasion in the market since there will be only one tax i.e GST. As far as retail is considered it would have a positive impact but for the entire retail sector, we need to see the impact in light of small retailer and shops.Every taxpayer needs to put a proper system of accounting and record keeping and there would be a minimum increase of cost to business anywhere around 5,000 to 10,000 per month.
IMPACT ON ECONOMY
Anil Ambani said “economic freedom” will be assured.He added to it by saying that “there are moments of life when history is made not in small steps of incremental gain but in giant leaps of ambition.”
According to Finance Minister Arun Jaitley, the introduction of GST can boost India’s economic growth by as much as 2 percentage points as greater tax compliance would boost revenues for the government. This would, in turn, reduce the budget deficit, and the revenues could help in building schools and highways.
It is the major problem that has to be addressed is to ensure that ‘Non deposited Tax’ by services should not be availed as input tax credit by service/good receiver, because the real hidden ‘Point of Tax leakage’ is not non-deposition of tax, but rather the wrong availment of non deposited tax as ITC from the Government.
The biggest free and democratic market in the history of humankind. It is the liberalization of our economic imagination. One big step that can lead to the hike in growth rate of the developing economy of India.