Goods and Services Tax (GST) is one of the biggest changes in the indirect tax reform in the country since the beginning of India’s economy. It was a part of the 122nd Amendment of the Indian Constitution and will be enforced from July 1 2017.
The GST bill is due to bring about a big change in the country this year. Here’s what you need to know about India’s newest tax structure.
The GST will reform indirect tax systems in India, eliminating several other taxes like service tax, excise, VAT, CENVAT, customs, etc. and bring all the different processes under one umbrella. It will help improve the GDP of India and has a basic structure which is discussed below.
Since our country is federal, the central government and the state government both have separate responsibilities for which they need to generate funds, leading to central and state taxes. Both of them were complex tax structures that contained several components. With GST coming into the picture, a dual system of GST will be introduced to make these taxes simpler. They are CGST and SGST.
As the names suggest, the Central GST will be levied by the central government and State GST by the state. Another tax form is the Interstate GST (IGST). This is applicable when goods are moved across different states.
Advantages Of GST
- The country will have a unified tax system, where all the components come under one umbrella.
- It reduces “tax on tax”, allowing consumers and manufacturers to pay just one tax for goods.
- That leads to lower manufacturing costs.
- This tax system will be simple and won’t burden you with multiple taxes.
2017 After GST
Higher GDP Growth
The GDP is what lets you understand how fast the economy of the country is growing. This directly affects the growth of citizens as a growing economy. That creates employment opportunities, letting citizens to grow with the economy.
With the expectation of a greater GDP growth, the government plans on Transform, Energize, and Clean India (TEC India). This is a programme where the government will introduce sub-themes to transform various sectors of India. This will empower women, youth, and the underprivileged sector.
Development Of Poor
With a growing economy, the government can spend more funds on infrastructure, development of rural areas, agriculture, etc. This will help the economy to grow further and also uplift the poor of the country.
Over 3 lakh crore will be spent on rural areas to establish gram panchayats in larger villages to encourage the growth of smaller villages. Farmers will receive at least a 100 rupees day employment to increase their income. The government has also used funds to build homes for the homeless.
Reduced Lending Rates
Because of demonetization, the lending rates for loans has decreased. This lets consumers buy homes at lower rates. The Prime Minister has also placed other schemes like reduction in the holding period of a property or land from 3 years to 2 years to help increase sales.
There are just a few of the changes that are due to be made. The real change will occur when the GST act is successfully implemented across India.