With the passage of “The Constitutional (122nd) Amendment Bill” in the upper house of the central legislature, we are ready to witness the biggest ever tax reform after independence. Though, still a long way to go but approval of upper house being considered as the biggest hurdle, has come out as a big sigh of relief for the persons in Centre.
GST, which can be defined in general as the tax on goods and services other than on alcohol for human consumption etc. will subsume the central taxes like Excise Duty, Customs Duty, Service Tax etc, and state level taxes like VAT, Luxury Tax, Entertainment Tax, Entry Tax etc. This will lead to a uniform tax structure across the country.
The cap on GST rate is yet to be determined but it is expected to remain at a standard rate of 18-20%. With the implementation, benefits coming out of this transformation will not be immediate and initially it can be taken as a bitter pill. For instance, Services are likely to be taxed at a higher rate as compared to the present one & so will be the textile goods etc. But India being a notoriously cumbersome place to do business as can be stated analyzing its complex tax structure and its 157th rank in the World Bank’s latest survey of the ease of paying taxes in 189 economies, this uniform tax regime will definitely improve the conditions.