Importance Of Good And Service Tax In India
Tax Structure in India
In the Indian tax system, the Central government levies excise duty on manufacturing and service tax on the supply of services. The State government levies sales tax or value added tax (VAT) on the sale of goods. In addition, the Central Government levies the Central Sales Tax (CST) on inter-state sale of goods which is collected and retained by the state exporting the goods. The states also levy tax on the entry of goods within their areas. Such multifaceted net of indirect taxes leads to a complex tax structure with no uniformity in the tax levied and collected by the states across the lengths and breadths of the country.
What is the Goods and Service …show more content…
It shall comprise of the representatives of both the Centre and the States, with the Union Finance Minister as its chairman and a member minister from each of the states and Union Territories. The Centre shall have a one-third presence in the GST Council. The GST council shall be empowered to make recommendations to the Union and States on issues like tax rate, tax ceiling, exemptions, etc. These shall act as guidelines to the governments. Every decision of the Committee shall be taken a majority of not less than three-fourths of the weighted member voters present and participating in the voting …show more content…
The Government intends to operationalize the bill in April 2016. However, the Bill is currently hung up in the Rajya Sabha where the opponents of the Bill have been raising their concerns regarding three key aspects of the Bill:
• Scrapping of the one percent additional IGST on inter-state movement of goods – The opposition has been arguing that this shall have cascading inflationary impacts, unnecessary hindering the streamlined flow of goods across the country.
• Fixing of a ceiling to the GST – The Government is reluctant to include a rate cap in the Bill as thereafter, for every increase in tax, the Government would have to seek Parliamentary approval.
• Modification in the Composition of the GST Council – The opposition has sought reduction in central government presence in the GST from the currently proposed one-third to one-fourth. The opposition is also pushing for a dispute resolution mechanism to be included, rather than leaving all matters in the hand of the GST