New Delhi:
The government has circulated official amendments to the GST bill to drop 1 per cent additional tax and include a definite provision in the statute for compensating states for revenue loss for 5 years as it gears up to discuss the long-pending bill in the Rajya Sabha on Wednesday. Here are benefits and challenges of implementing the bill.
Benefits:
# The tax structure will be made lean and simple
# The entire Indian marker will be a unified market and this will lower business costs.
# The bill will ease down exports as it is not applied for goods/services which are exported out of India.
# In the long run, the lower tax burden could translate into lower prices on goods for consumers.
# It can bring more transparency and better compliance.
# Less number of departments (tax departments) will lead to less corruption
# Better tax revenue as more business entities will come under the tax system.
Apart from benefits, implementing the bill would be more challenging.
Challenges:
# Since the bill is yet to be tabled and passed in the Parliament, it becomes necessary for government to convince the leaders.
# Even if the bill is passed it will require huge sum of money to revamp the whole infrastructure.
# GST, being a consumption-based tax, states with higher consumption of goods and services will have better revenues. So, the co-operation from state governments would be one of the key factors for the successful implementation of GST
# Since GST replaces many cascading taxes, the common man may benefit after implementing it. But it all depends on ‘what rate the GST is going to be fixed at?’ Also, Small Traders (based on Annual Business turnover) may be exempted from it.
