No Reduction In The Intensity Of GST Work
No Reduction In The Intensity Of GST Work
As the future of the Goods and Services Tax is still uncertain in India but our efforts to elaborate the broader concept of "GST" will continue in the same manner. Even after facing such a huge setback on major issues such as GST structure, Constitutional Amendment Bill, Dispute Settlement Body etc., our Finance Minister Mr. Pranab Mukherjee is leaving no efforts from his side for the successful implementation of the GST. He said that there will not be any reduction in the intensity in the ongoing work relating to GST. He also said that the Centre would continue to take into account the concerns of the States and work towards in developing a common ground for the implementation of the Goods and the Services Tax.
However, Mr. Mukherjee makes it clear that GST is unlikely to be implemented from the scheduled date of April 1, 2011. Now he is looking forward to roll out the Goods and Services tax simultaneously with the Direct Taxes Code (DTC) from April 1, 2012.
GST would be one of the most significant fiscal reforms of independent India. It is expected to replace all indirect taxes, thus avoiding multiple layers of taxation that currently exist in India.
The persons/assesses registered under GST (Manufacturers, Wholesalers and Retailers and Service Providers) are required to charge GST at the specified rate of tax on goods and services that they supply to customers. The GST payable is included in the consideration given by the recipient of the goods and services. The supplier must deposit this amount of GST with the Government. If the recipient of goods or services is a registered dealer, he will normally be able to claim a credit for the amount of GST he has paid, provided he holds a proper tax invoice. This "input tax credit" is set off against any GST (Output), which the assess charges on goods and services, which he supplies, to his customers.
The net effect is that dealers charge GST but do not keep it, and pay GST but get a credit for it. This means that they act essentially as collecting agents for the Government. The ultimate burden of the tax falls on the last and the final consumer of the goods and services, as this person gets no credit for the GST paid by him to his sellers or service providers.
Possible Impacts of GST are:
1. Many indirect taxes in state and central level subsumed by GST, you need to pay a single GST instead of all.
2. GST provide comprehensive and wider coverage of input credit set off, you can use service tax credit for the payment of tax on sale of goods etc.
3. Uniformity of tax rates and legal rulings across the states.
4. Prices of goods are expected to reduce in the long run as the benefits of less tax burden would be passed on to the consumer.
5. By reducing the tax burden, the competitiveness of Indian products in international market is expected to increase and thereby the development of the nation.
Therefore, GST will have a significant impact on almost all aspects of businesses operating in the country, including the supply chain, sourcing and distribution decisions, inventory costs and cash flows, pricing policy, accounting and IT systems and transactions management.
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