MAIN FEATURE
GST: Simplifying Tax Regime, Strengthening Business With the GST Law in force, companies are expected to achieve improved cost efficiency as the multi tax regime will give way to single tax regime. The companies, however, need to reshuffle their supply chain management and investment outlays to reap the maximum benefits of this new regime of indirect tax.
Rashmi Ranjan Mahapatra Rashmi.Mohapatra@kemppi.com
GST: Game Changer for the
to the consumer. Credits
and Entry tax, Purchase Tax,
and state governments,
Indian Economy
of input taxes paid at each
Luxury tax, and Taxes on
GST is expected to lead to
stage will be available in the
lottery, betting and gambling.
easier administration and
The Goods and Service Tax (GST) will be a comprehensive nationwide indirect tax on manufacture, sale and consumption of goods and services throughout India. The aim is to have one indirect tax for the whole nation, which will make India a unified common market.
addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.
The introduction of GST would be a significant step in the reform of indirect taxation in India. Amalgamating several
enforcement. From the consumer point of view, the biggest advantage would be in terms of a reduction in the overall tax burden on goods.
central and state taxes into
GST has been envisaged as
a single tax will mitigate
a more efficient tax system,
cascading or double taxation,
neutral in its application and
facilitating a common
distribution wise attractive.
GST will be levied and
At the central level, the
national market. This would
The advantages of GST are:
collected at each stage of
following taxes will be
be hugely beneficial for
sale or purchase of goods or
subsumed: Central Excise
consumers as the tax burden
services based on the input
Duty, Additional Excise Duty,
on inter-state logistics will
tax credit method and would
Service Tax, Countervailing
be cheaper. A common
make not just manufacturing
Duty, and Special Additional
tax would mean easy
but also the inter-state
Duty of Customs.
compliance and uniformity
transportation of goods more efficient.
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subsequent stage of value
At the State level, the following taxes will be
GST is a single tax on the
subsumed: State Value Added
supply of goods and services,
Tax/Sales Tax, Entertainment
right from the manufacturer
Tax, Central Sales Tax, Octroi
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of tax rates and structures for industry and would thus contribute to ease of
• Wider tax base, necessary for lowering the tax rates and eliminating classification disputes • Elimination of multiplicity of taxes and their cascading effects
doing business by removing
• Rationalization of tax
cascading costs. For central
structure and simplification of
August 2016