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IN Lifestyle ON 08 Aug, 2016
"One India, one tax, one market."
After all the hustle-bustle GST has gone through, finally the date has come for the biggest reform in India so far. Yes, GST has been taken up in the parliament by the Lok Sabha on August 8, 2016.
The Goods and Services Tax Bill, officially known as The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014, will be implemented in India from April 1, 2017.
Let's have an overview of how GST will affect different categories of people.
"Goods and Services Tax" would be a comprehensive indirect tax on the manufacture, sale and consumption of goods and services throughout India, to replace taxes levied by the central and state governments.
It is an indirect tax reform which aims to remove tax barriers between states and create a single market.
GST being the biggest reform in India seems like the most awaited one since its origination took place long back. It was on August 3, 2016, that the Rajya Sabha approved over it.
Consumers will be benefitted a lot since all taxes will be collected at the point of consumption which will involve both Central and State tax, plus tax will have to be paid just once.
Prices of phones, laptops and computers will definitely rise. The cost of clothes, lipsticks and other accessories will also be expensive. Fast food chains with delivery such as Dominos will still have free delivery and prices will stay the same.
Positive: It will have a deeper penetration of digital services.
Negative: Cost of electronics will rise. Duty on manufactured goods will go up from 14-15% to 18%.
Positive: Taxes would go down by 2-4% which will lower the average ticket price.
Reduced prices call for competition, which always benefits the consumers. Also, the simplified rules of taxation would encourage more investment.
Positive: Allow free movement of goods in all parts of the country. It will also eliminate the cascading effect of taxes on customers which will bring efficiency in product costs.
Negative: It will increase the administration, documentation workload for e-commerce firms and push up costs.
Positive: Handset prices likely to come down.
Negative: Call charges and data rates will go up if tax rate in the GST regime exceeds 15%.
Positive: The price of vehicles could drop by 8%.
Negative: Demand for commercial vehicles may be hit in the mid-term.
Imports would be subject to GST in the same manner as domestic goods and exports would be zero rated.
Positive: Companies could generate substantial savings in logistics and distribution costs. FMCG companies will have to now pay 17-19% of tax from that of 24-25%.
Negative: Prices for aerated drinks and tobacco products is likely to increase.
Negative: Flight fares to become expensive for the duty will be increasing 6-9% to 15-18%.
Positive: The effective rate of tax for cement is expected to come down to 18-20% from 25%.
Alcohol, tobacco, petroleum products.
Required: As soon as you carry out a taxable activity, you must register for the GST within 21 days.
Not required: You don't have to register for GST when you start a new company or when you are in business or trading.
During the final week of your taxable period, you will receive the GST return. You have to send both the GST return and any payment until the 28th of the month following your taxable period.
GST will be replacing the State VAT, Central Excise, Service Tax and a few other indirect taxes.
States are supposed to be fully compensated for any loss of revenue, they suffer through the switch to GST.
Services will be taxed at 10% and goods will be taxed at 20%.
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