IntroductionThe parliament of India has passed the GST bill and it came into force from1 July 2017. It is a tax reform measure which will simplify the tax regime. All type of tax such as excise duty, service tax, VAT, CST, etc. will integrate into single tax (GST). The long awaited dream of one country one tax and one market has become true due to GST implementation.
Historical evolutionGST has been adopted by more than 160 countries of the world. France was the first country to implement GST in 1954. The idea of GST first time came into year 2000 in Shri Atal Bihari Vajpayee government. Asheem Das Gupta committee was constituted to give recommendation on Goods and Services Tax (GST). The committee gave its report in 2009.In 2004 Vijay Kelkar committee recommended for the implementation of Goods and Services Tax (GST). PC Chidambaram announced to bring GST in the budget of 2010. The GST Bill was passed in lok Sabha in May 2015 but could not passed in Rajya Sabha due to congress oppose till Dec 2016. Finally, Rajya Sabha and the state legislative assemblies passed the bill. After the accent of president, it became Goods and Services Tax Act 2017. It came into force from 1 July 2017.
122th constitutional amendment 2016 It was necessary to amend the constitution before enacting the GST act. So 122th constitutional amendment act was passed. This amendment inserted article 279A, 269A and 246A into the Indian constitution. This provide these 3 acts.
GST Rates There has been fixed 5 GST rates in India. These are 0%,5%,12%,18%,28%. On cars 2%,5%,22%,cess is loaded above 28%GST. 2% for small car, 5% for medium cars, and 22% for XUVs.The GST rates of some countries as follows:
America-0 to 7.5%
Japan -10 %
India's' rate are very high and It is a burden on the citizen. Govt should review these rate and should remove 28% and 28%+ cess category.
GST Registration GST registration is compulsory for whose yearly turnover is above 20 lac. You can refer this article on registration- How to submit online application for GST registration
GST return filing After installing GST software and getting initial training one will be able to file GST return. It requires 3 returns per month and 36 return per year. GST R1, GST R2, GST R3 forms are required to file the returns. One need to upload all the invoices he has generated.
Short term impact In short term GST has negative impact on economy. Traders are agitating against GST. It has reduced GDP from 7.9 to 5.7 in the previous quarter of 2017. About 10 days' business was halted to migrate to GST regime. Traders has to keep records and upload return. This requires additional expenditure to meet the return filing requirement.
Long term impact on the economy
There are many long term impacts. Each is explained below:
Conclusion The impact is different on the different sectors. Still GST is a game changer. It is the greatest tax reform in this century. Tax has been simplified and avoidance is impossible so there is a great increase in tax base, tax revenue, tax collection and GDP. GDP will be in two digits after 2 years. Let us support the government. Finally the additional tax revenue will come back to us in the form of welfare and development.
GST is implemented and it is there to stay. Though it took a long time but finally it has seen the daylight.
There are many consequences of GST implementation which will be surfacing in near future one by one. Due to its input tax adjustment feature many business establishments are going for GST registration voluntarily due to its need to them rather than due to fear of Govt machinery. Some people are considering it as a new simplified unified tax which may one day even engulf and replace the income tax. Today it may seem a conjecture but could be a reality in future. There are many who are imagining that the GST tax which is paid by the individuals at many places may soon be deducted from their income tax. Seems a wishful thinking but again could become true soon.
Let us not imagine so far off but one thing is clear that the computerization of GST itself has removed so many hassles from the business environment and most of these organisations are happy due to this improved governance.
It is also hoped that with large collections of GST Govt may eventually cut down these rates to come near to the international bench marks in this area.
So far being a commoner if I am asked that how GST has affected me, I would say that the prices of everything from basic food to travelling have increased. It has not provided any relief so far, I don't know what effects it has on the economy but I do know that I am shelling more money than before.