The Goods and Service Tax bill have made its way ahead towards implementation after grabbing majority in Rajya Sabha. The GST bill would be responsible for replacing the indirect taxes charge on the goods and services, by both central and State Government as soon as is implemented. GST would merge the State economies and would be the major taxation reforms in India.
This indirect taxes reformation in India has motivated the businesses for restructuring their business models, supply chains, and systems with the variety of taxes and costs that are involved. The Indian Government aims to implement GST bill from 1st April 2017.
What Is The Main Aim Of GST Bill?
There are several visions related with GST. Some regard it as beneficial, whereas some declare it as a burden. The main aim of this GST bill is the formation of single, cooperative and undivided Indian trade market.
This GST bill aims to make the Indian economy powerful. After going through several discussions between ruling party and the opposition party, the GST bill has finally made its way ahead with few negotiations. The GST bill finally cleared up the major hurdle after Rajya Sabha voted for its favour on 3rd August 2106 in the evening.
GST Aims To Improve GDP
The GST bill would make India “One Nation, One tax” economy. The GST bill is being welcomed by the Indian Industry and Trade sectors as the reformation would make Indian market as Single tax-unified.
The main objective of the proposed GST bill is to provide uniform indirect tax system in a transparent way that would improve the way of doing business, make the tax base wider, increase the tax revenues, remove the multiple tax structure, make the tax return filings easier and reduce the inflation which would in result increase the GDP.
Many Sectors Would Face Major Challenge In Up And Down Of Taxes
With the proposal of GST bill, the effective tax rates on goods would decline. 70-75% of the CPI basket is expected. Around 35-40% of goods are not subjected to tax that includes the agricultural goods majorly.
The current service-oriented modules constitute around 25-30% of the CPI basket that comprises major share in the housing, communication, and transport sectors. The service tax is not applicable on 12% of CPI basket, and these services are expected to remain under the administration of GST. The tax rates vary according to the sectors.
Sectors That Are Currently Charged For Taxes And The Taxes Would Change To After GST Bill Implementation
- Automobile-Current- 30-47%- change to-20-22%
- Cement- Current-27-32%- change to- 18-20%
- IT and ITe’s- Current- 14%-change to- 18-20%
What Are The Benefits Of Implementation Of GST Bills?
- The retail price of the goods would be reduced.
- GDP would be enhanced to grow higher.
- Inflation reduction for a long time
- Generate more job opportunities
- E-commerce trading would get a boost up with the increase in market penetration.
- The indirect tax collection would increase with a wider base.
- GST bill would shift emphasizes from indirect tax to direct tax collection on a long-term basis.
- GST bill would also be responsible in Foreign Direct Investment which would improve the international investors.
Costly and Cheaper Products with GST Bills
Luxury cars, Smartphone, dining costs at restaurants, branded jewelleries; pharmaceutical products, utility bills, oil, and gas, etc. are few of the products and services that would grow higher for the GST bills.
With the growth in utility bills, oil and gas, pharmaceutical products or medicines, the common man are likely to get worried with the increase in the cost of these services and products. It would hit the salaried class peoples with the increase in dining costs in the restaurants and the branded jewelleries. The cost of luxury cars even would hike up.
The GST bill would go advantageous for the infrastructure development industries. With the reduction of cement and electrical appliances, the cost of developing structure is likely to get reduced. The cost of small cars and bikes would reduce with the implementation of GST bill. The FMCG products like soap, detergents, cosmetics, etc. would reduce.
The Trade Sectors That Would Gain High Benefits
- The trades or businesses involved in logistics are going to be the gainers with the GST bills. With the proposal of Make in India, the rapid increase in e-commerce companies would flawlessly be gainful by the GST bills. The companies like CCI, Interglobe Aviation, Adani SEZ, Allcargo, Aegis Logistics and Gujurat Pipavav would boost up high.
- Another sector that would get high benefits with the GST bill is the automobile sector. The small car manufacturers and 2-wheeler bike companies would get high benefits for the drop down in costs. Maruti, Tata Motors, Hero Motors, Bajaj Auto, Eicher, etc. would get high benefits.
- The FMCG sector would even grab the benefits of low taxes and logistic costs featured by the GST bill. Hindustan Levers, Godrej, P&G, and ITC are the listed companies that would get benefits.
- The electrical appliance and the white good manufacturers are likely to grab advantages of GST bills.
- Imposing a great input in the infrastructure industry, the cement manufacturing companies would upsurge with the GST bills. The lower costs would increase the demand of the structure developing element that would magnificently decrease the overall cost of infrastructure.