The Goods and Services Tax Bill or the GST Bill is due to be discussed
in Rajya Sabha or the upper house of Parliament this week. The bill was
passed by the Lok Sabha last week.
Here are 10 facts about GST - hailed by Finance Minister Arun Jaitley as
the biggest tax reform since independence - which the government wants
to roll out by April 2016:
1) The GST will cut
down the large number of taxes imposed by the central government and
states and will lead to the creation of a unified market, which would
facilitate seamless movement of goods across states and reduce the
transaction cost of businesses.
2) While the
existing central taxes include excise duty, service tax and additional
customs duties, the state taxes comprise of entertainment tax, luxury
tax, lottery taxes, electricity duty, central sales tax, octroi, value
added tax (VAT). The GST will dissolve all the taxes into one making
India a single, unified national market.
can lead to 2 per cent increase in GDP or gross domestic product, Mr
Jaitley had said after introducing the bill in the lower house of
Parliament or Lok Sabha. Economists and analysts back the Finance
Minister on this claim. "GST is going to lead to a win-win situation as
far as the centre and the states are concerned. It is going to up
India's GDP. It is going to up India's revenue," Mr Jaitley had said.
will help corporates by simplifying taxation - it will reduce tax on
tax, reduce tax compliance burden, and there will be more transparency
and efficiency as it will reduce corruption and increase
5) For consumers, GST will
reduce prices of goods and services in the long run, and will improve
the efficiency of goods and services being delivered to them. They will
pay one tax.
6) The bill on GST was introduced
in the Lok Sabha in December last year and its roll-out has missed
several deadlines because of lack of consensus among states. GST is in
force in 150 countries.
7) While liquor has been
completely kept out of the GST, petroleum products like petrol and
diesel will be part of the new regime from a date to be decided at a
future date by the GST Council, which will have two-third of its members
8) As per the Bill, the states
where goods originate can levy 1 per cent additional tax over GST to
make up for any revenue loss for the first two years.
Centre and states have been working on a new Revenue Neutral Rate
(RNR), which is currently pegged at 27 per cent. RNR is one at which
there will be no revenue loss to states after GST implementation.
re-calculation of RNR is necessary as at present it does not take into
account the taxation of petroleum products as also the 1 per cent
additional tax which states can levy as part of the GST Bill.