GST – one nation one tax – a myth or a reality:
The era of Goods & Services Tax is finally expected to kick-off from July 1. What will be the extent of impact, only time will tell. But here are a few pointers to how things might pan out.
Good for taxpayers
The alignment of various taxes under one tax system will make things easier for developers. Credit for taxes paid on various inputs — materials and services — will now be easier to track and set-off.
This will not only simplify accounting, but bring in transparency and remove the incidence of double taxation in many cases. All this should help in lowering costs.
Uncertainty on rates
The only area of slight consternation is assignment GST rate for various commodities and services. There is an expectation that the rate will translate into higher tax payouts for various commodities and services. While this can push up purchase cost for buyers, there is an expectation that gains accruing to manufacturers from a transition to the new regime will likely set this off.
But the increased transparency and accountability of manufacturers is the biggest gain for buyers, as regulators will be able to far more easily track transactions and expenses. The drive against black money, in conjunction with GST and the roll-out of the new sector regulatory regime will make investing in industry less risky and obtaining money circulation for transactions less cumbersome.
The GST rates would depend upon whether a rich person or a common man uses the commodity. Once government implement the new regime, the harassment of businesses by different authorities will end and India will be one rate for one commodity throughout the country. Today you have tax on tax, you have cascading effect. When GST law get rid of all of that, goods will become slightly cheaper. The Council has decided multiple GST rates as it cannot tax chappal and BMW at the same rate.