One of the biggest taxation reforms in India, the Goods and Service Tax (GST) is all set to integrate State economies and boost overall growth. GST will create a single, unified Indian Market to make the economy stronger. Finance Minister Pranab Mukharjee while presenting the Budget on 6 July 2009, said that GST would come into effect from April 2010. The implementation of GSTN is set on August 2010. GST might not be implemented before 1 April 2013.
Goods and Service Tax - is comprehensive tax levy on manufacture, sale and consumption of goods and services at national level. Through a tax credit mechanism, this tax is collected on value-added goods and services at each stage of sale or purchase in the supply chain. The system allows the set-off of GST paid on the procurement of goods and services against the GST which is payable on the supply of goods or services. However, the end consumer bears this tax as he is the last person in the supply chain. Experts say that GST is likely to improve tax collections and boost India's economic development by breaking tax barriers between States and integrating India through a uniform tax rate.
Under GST, the taxation burden will be divided equitably between manufacturing and services, through a lower tax rate by increasing the tax and minimizing exemptions. It is expected to help build a transparent and corruption-free tax administration. GST will be is levied only at the destination point, and not at various points (from manufacturing to retail outlets) Currently, a manufacture needs to pay a tax when a finished product moves out from factory, and it is again taxed at the retail outlet when sold.
Benefits to State and Center - It is estimated that India will gain 15 billion US dollars a years by implementing the Goods and Service Tax as it would promote exports, raise employment and boost growth. It will divide the tax burden equitably between manufacturing and services.
Benefits to Individuals and Companies: IN the GST system, both Central and States taxes will be collected at the point of sale. Both components will be charged on the manufacturing cost. This will benefit individuals as prices are likely to come down. Lower prices will lead to more consumption, thereby helping companies.
Goods and Service Tax - is comprehensive tax levy on manufacture, sale and consumption of goods and services at national level. Through a tax credit mechanism, this tax is collected on value-added goods and services at each stage of sale or purchase in the supply chain. The system allows the set-off of GST paid on the procurement of goods and services against the GST which is payable on the supply of goods or services. However, the end consumer bears this tax as he is the last person in the supply chain. Experts say that GST is likely to improve tax collections and boost India's economic development by breaking tax barriers between States and integrating India through a uniform tax rate.
Under GST, the taxation burden will be divided equitably between manufacturing and services, through a lower tax rate by increasing the tax and minimizing exemptions. It is expected to help build a transparent and corruption-free tax administration. GST will be is levied only at the destination point, and not at various points (from manufacturing to retail outlets) Currently, a manufacture needs to pay a tax when a finished product moves out from factory, and it is again taxed at the retail outlet when sold.
Benefits to State and Center - It is estimated that India will gain 15 billion US dollars a years by implementing the Goods and Service Tax as it would promote exports, raise employment and boost growth. It will divide the tax burden equitably between manufacturing and services.
Benefits to Individuals and Companies: IN the GST system, both Central and States taxes will be collected at the point of sale. Both components will be charged on the manufacturing cost. This will benefit individuals as prices are likely to come down. Lower prices will lead to more consumption, thereby helping companies.
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