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All That Fuss About The Goods And Services Tax 2017

What is politics anyway? Why is it so sacred to talk in public? Everybody from pillar to post are gossiping about the recent roll-out for the much awaited and anticipated GST bill 2017! For the ones who are unaware of the abbreviation of GST (P.S- even I was, till the time I googled it up) , it is ‘The Goods and Services Tax’. It is a value added tax levied on most goods and services sold for domestic consumption. It is the most critical tax reform that India has been longing for. With the finalisation of the rate-bands and most of the rules, Finance Minister Mr. Arun Jaitley has reiterated that July 1 will be the roll-out date for the revolutionary tax law.

GST, goods and service tax, tax, taxation, finance, India, slabs, government
Photo Courtesy: The Indian Express

 The main aim behind these new tax slabs:

GST, goods and service tax, tax, taxation, finance, India, slabs, government
Photo Courtesy: Yennes | Tally in Chennai

1. Businesses need to move from offline data recording to online data recording to file the return.
2. Technology will play a vital role for businesses under GST as GST is highly transaction based compliance system. This will help to manage better cash flows.
3. As per Nomura (financial services group) report, gains from GST in its current form will be “far less than initially envisioned”.

GST, goods and service tax, tax, taxation, finance, India, slabs, government
Image Courtesy: The Economic Times

4. The GST as proposed has a multiple rate structure as almost all goods and services have been classified into groups attracting GST rates of 0, 5, 12, 18 and 28 per cent, respectively. In addition, four items (namely luxury cars, aerated drinks, tobacco and ‘paan ‘ related products) will attract separate cesses each.

5. The prime benefit of GST is that India will become a common market. One product or service will have a single tax rate in any part of the country. No more taxes that are barriers to industry such as octroy (duty levied in some countries) or entry tax.

6. Under the GST regime, all goods that are imported will pay the full rate of Central plus State GST.

GST, goods and service tax, tax, taxation, finance, India, slabs, government
Image Courtesy: Deccan Chronicle

7. There will be no tax on several items including rice, wheat and other essential items, which constitutes 50% of CPI inflation basket.
8. The lowest tax rate of 5% is proposed for items of mass consumption used by common people such as spices, tea and mustard oil.
9. There will be two “standard” rates of 12% and 18% covering most manufactured items and services.
10. The highest tax rate of 28% will be imposed on items like luxury cars, pan masala, tobacco and aerated drinks. These items are currently attracting a tax of 27-31%.

We are not so naïve as to believe that conversation can solve the world’s problem, but we can say with confidence that not having the conversation make those problems significantly worse. The biggest question that pops up after witnessing the tax slabs is ‘What would be the impact of GST on our economy? ‘
Once I was fully knowledgeable about the concept of GST, questions like ‘Will India emerge as common market with one tax?’, ‘How it would affect people and their profession as an individual?’, ‘How will consumers be benefitted?’, ‘Would the roll out help the current economy?’ and many more popped up.

GST, goods and service tax, tax, taxation, finance, India, slabs, government
Photo Courtesy: The Indian Express

I personally believe that the 28% tax slab would be too much for the comman man to afford. As for today, the voices in the government have expressed contrasting views on the issue of Universal Basic Income (form of social security that puts a fixed amount of money into the pockets of every unemployed and poor), but the finance minister claims that the scheme is not political feasible. Now the question lingers that would GST lower tax burden? Will it benefit our industry today? How would it affect the inflation rate?
‘What are your views on the four slab structure 5, 12, 18 and 28%?’ and ‘Is your business ready for GST?’ Think for yourself and let’s wait for the GST roll out on July 1 2017. You can mention in your questions, queries, reviews or suggestion on this topic in the comment section below.

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