The goods and services tax, a radical step towards India’s transformation into a common market, was launched on 30th June midnight – at 00:00 hours. The historic Central Hall of Parliament opened for its first midnight ceremony in two decades for the launch of India’s most sweeping tax reform, GST, with country’s top leaders, cinestars and industrialists in attendance. PM Modi,at the launch event, said GST was not just about taxation reform that would help businesspersons by putting an end to tax terrorism, but is a measure that will help in the fight against corruption and black money.
The government has opted for four slabs for both goods and services — 5%, 12%, 18% and 28%. In addition, several items face zero levy, while bullion will attract 3% GST and luxury and sin goods that are in the top bracket will also attract a cess that will be used to compensate states for revenue loss. The proposed tax system will take the form of “dual GST” which is concurrently levied by central and state government. This will comprise of:
Prime Minister Narendra Modi disclosed on Saturday that the registration of over one lakh companies which had allegedly engaged in suspicious transactions post-demonetisation had been scrapped as he sought to cast the goods and services tax (GST) as his second strike against black money and corruption. “Forty-eight hours before the launch of GST, we, by one stroke of pen, cancelled the registration of one lakh companies which, based on the mining of deposits made in banks after November 8, were found to have engaged in serious irregularities,” said Modi, adding that two lakh other registered companies are under the scanner for involvement in what looked like dubious transactions in the aftermath of demonetisation. He also said the government has identified 37,000 shell companies which engage in money laundering and help those with black money.
Here’s how GST will help the common man and economy:
COMMON MAN FRIENDLY
1. Huge number of items are either tax exempt or in 5% tax bracket.
2. Maximum benefits to the poor and the common man+ .
3. Will ensure that the poor get their due.
4. Level playing field for small traders in any part of the country.
ADVANTAGES FOR TRADE AND INDUSTRY
1. Common procedures for registration, duty payment, return filing and refund of taxes
2. Seamless flow of tax credit from manufacturer/supplier to user/retailer to eliminate cascading of taxes.
3. More efficient neutralization of taxes to make our exports more competitive internationally.
4. Benefit of exemption/composition scheme for a large segment of small scale suppliers to make their products cheaper.
BENEFITS TO ECONOMY
1. To create a unified common National market
2. To make India a manufacturing hub
3. To boost investments and exports
4. To generate more employment by increased economic activity
SIMPLIFIED TAX STRUCTURE
1. Reduction in multiplicity of taxes, now leviable on goods and services, leading to simplification.
2. Simpler tax regime with fewer exemptions.
3. Harmonization of laws, procedures and rates of tax across the country.
4. Common system of classification of goods and services to ensure certainty in tax administration.
CREATING ONE ECONOMIC INDIA
1. Freedom of movement of Goods and Services.
2. Consumers to benefit by increased competition.
3. Level-playing field for producers and consumers across the country.
4. Strengthening the sense of nationhood and unity.