GST also known as Goods and Services Tax is defined as the giant indirect tax structure designed to support and enhance the economic growth of country.GST is a comprehensive tax levy on manufacturing,sale and consumption of goods and services at a national level.The Goods and Services Tax bill or GST bill also referred to as the constitution (120 Amendment) bill,2014 initiates a value added tax to be implemented on national level in India.GST will be an indirect tax at all stages of production to bring about uniformity in the system.On bringing GST into practice,there would be amalgamation of central and state taxes into a single tax payment.
WHY NO TO GST: Wall street firm Goldman Sachs, in a note India Q and A on GST-Growth impact could be muted, has put out estimates that show the Modi governments model for GST will not raise growth, will push consumer prices inflation and may not result in increased tax revenue collections. India has adopted dual GST instead of National GST. It has made the entire structure of GST fairly complicated in India. The centre will have to coordinate with 29 states and 7 Union territories to implement such tax regime. Such regime is likely to create economic as well as political issues. The proposed GST structure is likely to succeed only if the country has a strong IT network. It is well known fact that India is still in a budding state as far as internet connectivity is concerned. Moreover,the proposed regime seems to ignore the emerging sector of E-Commerce.
Communication is considered to be necessity and one cannot do without communication. The proposed GST regime appears to be unfavourable for telecommunications sector as well. One of the major drawbacks of GST regime could be the direct in service tax rate from 14% to 20-22% (GST impact on telecommunications sector in India).The proposed GST appears to be silent on whether telecommunication can be considered and the category of goods and services. The proposed GST regime intends to keep petroleum products, electricity, real estate and liquor for human consumption out of the purview of GST. It is well known fact that petroleum products have been a major contributor to inflation in India.Inflation in India depends on how the government intends to include petroleum products under GST in future. Electricity is essential for growth and development of India.If electricity is included under standard or luxury goods in future then it would badly affect the development of Indianite is said that GST would impact negatively on the real estate of India.
Also the proposed GST regime “would be capable of being levied on sale of newspapers and advertisements therein.”This would give the government’s the access to substantial incremental revenues since the industry has historically been tax free.It sounds ridiculous but the provision of GST is likely to make the supervision of operations by its board or senior managers across the country’s offices of a country a taxable service by allowing each state to raise a GST demand of the company.
CONCLUSION: The proposed GST regime is a half-hearted attempt to rationalise indirect tax structure.More than 150 countries have implemented GST. The Govt of India should study the GST regime setup various countries and also their fallouts. At the same time the government should make an attempt to insulate the vast poor population of India against the likely inflation due to implementation of GST. No doubt GST will simplify indirect tax system and will remove inefficiencies.
(The author is student of economics. Views are his own [email protected])
