GST : THE GOD SENT TAX

It is really a god sent tax, as people with different inhibitions can come and work together for betterment of all of us. Well I am talking about our politicians. But why are they so eager to do it…… You can call it anything…. Need of the hour or need of the day …. Whatever.  Business community both domestic and foreign has made it plain clear to set the ball rolling. GST is expected to improve tax compliance, remove multiplicity of taxes, thus reducing price of goods and services and boosting revenues. In other words it will be one of the stepping stones for ease of doing business.

Our Chief Economic Advisor submitted GST report which has already accepted the removal of 1% tax on interstate sales. The report recommends three tier tax structure with essential goods taxed at 12%, luxury goods taxed at 40% and standard tax rate of 17-18% for remaining goods and services.  The report also recommends revenue neutral rate of 15-15.5% at which there would be no revenue loss for both the centre and state. For a country as diverse as India with so many complexities, the three tier GST structure seems to be appropriate. In addition to that GST tax rate base has been broadened to include petroleum, electricity and real estate. Goods & Services Tax needs to be passed by the upper house of parliament and subsequently by state assemblies for its successful implementation by April 2016. Thus, political constraints and economic necessities should be crystallized into one unified transparent tax structure. This will not only raise our GDP but also transform visions like ‘Make In India’ into reality.