The 101st Amendment of the Constitution,\nNational Goods and Services Tax is creating a radical change in the functioning\nof the Indian Economy. This is evident as Moody\u2019s credit rating agency has\nupgraded India\u2019s Government bond rating to Baa2 from Baa3. India has climbed 30\nnotches into the top 100 rankings on the World Bank\u2019s Ease of Doing Business\nIndex. Improvement in these ratings and indices can be attributed to multiple\ninstitutional and structural reforms. However, implementation of GST has played\na predominant role. <\/p>\n\n\n\n
Since historical times in India, taxes have been\ncollected from people to reduce economic disparities in the population. Myriad\nways of taxation and types of taxes are mentioned in the Manu Smriti<\/em> and\nArthashastra <\/em>etc.With the passing of time variety of tax\nimpositions were made on the people conforming to the then prevailing economic\nand social situations. Some of these include Ghari, Jaziya, Chauth <\/em>etc.During colonial rule, the taxes levied were usurious and created a burden\non the people. However, when India gained Independence, taxes were classified\nas direct and indirect taxes. Until July 1, \n2017, there were multiple indirect taxes in the country, which have been\nharmonised and consolidated by the implementation of GST. GST is commonly\nreferred to as \u201cONE nation ONE tax\u201d. <\/p>\n\n\n\n The items under the GST are categorised into\nfive major slabs\u20140%, 5%, 12%, 18% and 28%. The products and services are placed\nunder each slab as per the rate of consumption by the common people. Quotidian\ngoods such as foodgrains, bread, butter etc. are placed under the 0% bracket.\nWhile luxury items such as top brand cars, refrigerators etc. fall under the\n28% category. Goods and services are placed under each category with utmost\nprudence and sagacity, as products under the 28% category include those\ncontaining tobacco. Additional cess too is levied on these products, thereby\ndiscouraging their consumption. <\/p>\n\n\n\n In contrast with other economies, India has the\nhighest number of GST slabs. This measure avoids the unexpected and sudden\nfluctuation of prices, caused by the imposition of a single tax rate on all\ngoods and services. This sudden rise in prices (inflation) was experienced in\nSingapore during its implementation of the GST regime. Nations such as Japan,\nNew Zealand etc. have amended the GST rates multiple times due to fall in\nGovernments\u2019 revenue. However, in India, net direct tax receipts grew 14.4% to\ntouch Rs. 4.8 lakh crore in the April-November 2017 period. This indicates that\nthe government exchequer has improved its revenue and will use these receipts\nfor ameliorating the country\u2019s economy. <\/p>\n\n\n\n The GST is a destination-based tax, as the tax\namount is levied at the point where goods and services are consumed. This\nfeature of the GST makes it an idiosyncratic tax regime. A destination-based\ntax wards off the cascading effect of taxes, thereby making goods available at\na lesser cost. The application of the destination principle also achieves\nneutrality in international trade. According to this principle, exports are not\nsubject to tax, while imports are taxed by the rules and regulations in the\njurisdiction of its consumption. This encourages exports which contribute to\nthe GDP of the nation, thereby increasing the growth rate of the economy. <\/p>\n\n\n\n There\nare three types of GST namely: CGST (Central GST), SGST (State GST) and IGST\n(Integrated GST). The money collected as revenue is divided between the States\nand the Central Government. However, during interstate movement of goods and\nservices, IGST is levied on the transaction and the tax is collected by the\nCentre which is later apportioned to the States based on the amount of\nconsumption of goods. This mechanism of distribution of funds requires the\nStates and the Central Government to work in tandem with each other in turn\nimproving their liaison and promoting co-operative federalism. This close\ncoordination would help in the better formulation of policies for the citizens.\nEnhancing coordination between the two levels of government aids in maintaining\npolitical stability within the country, which ensures better implementation of\nlong-term schemes. Better execution of schemes helps in reducing financial\ninequality among people. <\/p>\n\n\n\n India being a non-rentier state, the bulk of the\ngovernment revenue is generated through taxes. Tax revenue can be effectively\naugmented without burdening the people, by increasing the tax base (number of\npeople who pay taxes) while reducing the tax rate. GST has swiftly achieved\nthis agenda, as Economic Survey 2017-18 suggests that there is a 50% increase\nin the number of indirect taxpayers due to the implementation of GST. The main\nreason for this being provision of input tax credit under the GST. Moreover,\nthis has assisted in formalising the Indian economy thereby reducing the amount\nof unaccounted money. <\/p>\n\n\n\n As every storm is accompanied by rain, GST too\nhas caused short-term compliance troubles for taxpayers. However to mitigate\nthese glitches, Government has introduced the GST Suvidha Provider (GSP) under\nthe GST Network company. The GSPs are envisaged to provide innovative and\nconvenient methods to taxpayers and other stakeholders in interacting with the\nGST Systems from registration of entity to uploading of invoice details to\nfiling of returns. To ensure that the benefits of GST are transferred to the\npeople, Anti-Profiteering Committee has been set up by the Centre. This makes\nGST a win-win situation, as it is a consumer and manufacturer friendly regime.<\/p>\n\n\n\n Certain steps can be taken to improve GST. They\nare incorporating more products and services including real estate, energy and\npetrol within its ambit. By increasing the area under its purview, GST will\nhelp in controlling the petrol costs in a scenario of rising oil prices around\nthe world. Enhancing coordination and streamlining its IT structure would make\nGST a hassle-free service. Reducing the number of rate slabs in the long term\nis another suggestion to boost the positive effect of GST. \n\nA great man once said : \u201cWork to meet long-term goals and not short-term\nsatisfaction.\u201d GST is one such measure, which will help the country meet\nlong-term goals of sustainable development, formalisation of the economy and\naffordable prices of goods. Therefore, it is a whole new ball game in the\nindirect tax regime of the world\u2019s largest democracy.\n\n\n\n<\/p>\n","protected":false},"excerpt":{"rendered":" The 101st Amendment of the Constitution, National Goods and Services Tax is creating a radical change in the functioning of the Indian Economy. This is evident as Moody\u2019s credit rating agency has upgraded India\u2019s Government bond rating to Baa2 from Baa3. India has climbed 30 notches into the top 100 rankings on the World Bank\u2019s […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/www.competitionreview.in\/blogs\/wp-json\/wp\/v2\/posts\/369"}],"collection":[{"href":"https:\/\/www.competitionreview.in\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.competitionreview.in\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.competitionreview.in\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.competitionreview.in\/blogs\/wp-json\/wp\/v2\/comments?post=369"}],"version-history":[{"count":1,"href":"https:\/\/www.competitionreview.in\/blogs\/wp-json\/wp\/v2\/posts\/369\/revisions"}],"predecessor-version":[{"id":370,"href":"https:\/\/www.competitionreview.in\/blogs\/wp-json\/wp\/v2\/posts\/369\/revisions\/370"}],"wp:attachment":[{"href":"https:\/\/www.competitionreview.in\/blogs\/wp-json\/wp\/v2\/media?parent=369"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.competitionreview.in\/blogs\/wp-json\/wp\/v2\/categories?post=369"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.competitionreview.in\/blogs\/wp-json\/wp\/v2\/tags?post=369"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}