India is all set to implement the long awaited Goods and Service tax (GST) from July 1. The GST aims are creating a single market, removing tax barriers between states. A plethora of cascading central, state, interstate and local taxes will be replaced by a single, nationwide, value-added tax on goods and services when the GST rolls out.
At least 17 state taxes would be replaced, making the taxation of goods and services simpler than the current system. GST would avoid double taxation as it would aloe goods to be taxed at the point of consumption rather than production.
The consumers will not be subjected to double taxation once the GST is implemented. All the taxes levied at the time of purchase will include both state and central government’s taxes. State governments will not be able to indiscriminately increase the taxes once the GST comes into force.
Finance Minister Arun Jaitley has said that implementation of GST can boost the economic growth of India by 2 percentage points as greater tax compliance would raise revenues for the government. It would cut the budget deficit and the revenues could be used in building schools and highways.