Demystifying GST (India)

The Goods and Services Tax, which is also known as VAT in many countries is a multi-stage consumption tax on goods and services. It is levied on the supply of goods and services at each stage of the supply chain from the producer up to the stage of final consumption.
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Demystifying GST (India)International Journal of Management (IJM)Volume 7, Issue 6, September–October 2016, pp.111–115, Article ID: IJM_07_06_012Available online athttp://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=7&IType=6Journal Impact Factor (2016): 8.1920 (Calculated by GISI) www.jifactor.comISSN Print: 0976-6502 and ISSN Online: 0976-6510© IAEME Publication DEMYSTIFYING GST (INDIA) Akanksha Jain Department of Commerce, PGDAV College, University of Delhi, India. ABSTRACT The Goods and Services Tax, which is also known as VAT in many countries is a multi-stage consumption tax on goods and services. It is levied on the supply of goods and services at each stage of the supply chain from the producer up to the stage of final consumption. The taxation of goods and services in India has, hitherto, been characterized as inconsistent and distortionary tax, resulting in mis-allocation of resources, lower productivity and economic growth. Thus, the need for a uniform formula for the calculation and implementation of tax has been felt for a very long time. The new amendment on GST aims at removing all these distortions and moving India towards greater growth. The Constitution Amendment Bill for Goods and Services Tax (GST) was approved by The President of India post its passage in the Parliament (Rajya Sabha on 3 August 2016 and Lok Sabha on 8 August 2016) and after ratification by more than 50 percent of state legislatures. The Government of India is committed to replacing all the indirect taxes levied on goods and services by the Centre and States, and implementing GST by April 2017. The following paper examines salient features of the new GST Act in India. Key words: Constitution, GST, Tax, India, Salient features. Cite this Article: KDV Prasad and Rajesh Vaidya, Factors Influencing the Performance Appraisal System among Women and Men: A Comparative Analysis using Multinomial Logistic Regression Approach. International Journal of Management, 7(6), 2016, pp. 111–115. http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=7&IType=61. INTRODUCTIONIndian tax system is considered one of the most complex systems in the world on account of existence ofmultiple taxes. Taxes such as, purchase tax, central sales tax (CST), value added tax (VAT) and many othersmake it difficult to undertake any business activity in India. Moreover, the dissimilar taxation rates at thestate level create a mammoth amount of misperceptions and mistrust. The tax base is fragmented betweenthe Centre and the States. Services, which make up half of the GDP, are not taxed appropriately. In manysituations, the existing tax structure has cascading effects. These problems lead to low tax-GDP ratio, besidescausing various distortions in the economy. A uniform tax structure that does not vary from state to state,from product to product has been the need of hour. Introduction of GST is seen as the much needed taxreform to address many of the problems associated with the current tax system. This paper is aimed atthrowing light on the fundamental principles and dimensions of GST in India. http://www.iaeme.com/IJM/index.asp 111 editor@iaeme.com Akanksha Jain2. GOODS AND SERVICES TAXThe Goods and Services Tax or GST, officially known as The Constitution (One hundred and twenty second)Amendment, is a uniform, comprehensive, destination-based indirect tax applicable on manufacturing, saleand consumption of goods in India. It is the boldest and the biggest tax reform in more than 60 years ofIndian history. GST, being a destination-based consumption tax, based on value-added principle, would alsogreatly help in removing economic distortions and will help in development of a common national market.3. GST TIMELINE • The discussion on GST was started by the Atal Bihari Vajpayee government in 2000. He set up an empowered committee, which was given the task of designing the GST model, developing the IT required and overseeing its successful roll out. • In 2003, The Kelkar Task Force on implementation of the Fiscal Responsibility and Budget Management legislation (FRBM Act), reinforced the need for a uniform Goods and Service Tax (GST). It pointed out the many impediments in the existing system of taxation of goods and services. • In 2006, Shri P. Chidambaram, the than Finance Minister, mooted out a proposal to introduce a national level, Goods and Services Tax (GST). Since the proposal involved reform/ restructuring of not only indirect taxes levied by the Centre but also the States, the responsibility of preparing a design and road map for the implementation of GST was assigned to a Empowered ...