Goods and Services Tax (GST) implementation in India was not an overnight decision. The initiation or establishment of tax reform has called for both time and patience and is anticipated to prominently affect in Indian economy. The roots of GST in India were first planted in the year 2000 by former Prime Minister Atal Bihari Vajpayee.
Later in 2005, former finance minister then P.Chidambaram during his budget session, appealed for the serious or immediate requirement of tax reforms in India in the area of Indirect Taxation. Another thing happened in 2010 when the finance minister then Pranab Mukherjee during his Budget session conveyed to the nation that the GST will be announced in India in April 2011.
The Government was assuming to pass this bill in the previous session but was not having support from opposition parties.To have the bill approved, it needs to have a majority in both the Lok Sabha and Rajya Sabha, but regrettably, the BJP law creators in Rajya Sabha are in smaller numbers which are limiting them from passing the bill.
The bill was lined up to go through 15 out of 29 different states for their approval as this was the constitutional amendment bill that has projected changes in the structure of fiscal coalition. Undoubtedly, the business experts and government bureaucrats considered this new proposed structure on combined indirect tax system to closely adopt the thought of “One Nation, One Tax”.To know the effect of the bill across businesses after it is made into decree, it becomes essential the changes with the current tax structure with reverence to structure of GST and the different ways numerous tax features will function across transaction of goods and services.
There was a strong urge for the implementation of GST. Since during the middle of 1980, numerous indirect tax changes occurred, though in a fragmentary way. But the changes have hugely altered the taxation system in the country and helped in removing the cascading effect of the tax-on tax. Though, the overview of new taxes was partly successful then.
Apart from this, Value added tax was introduced in 2005 to the nation, and it replaced the sales tax and included all the transactions and sale of goods and services up to the retail level. This VAT tax ensured that involvement of every person in the transaction chain will get the credit of all the taxed that they have paid on the previous purchases. Though, this tax also did not totally remove the cascading effect of taxes.
The need for GST also occurred because of the following problems in VAT tax like the credit of Input VAT can be profited against Output VAT while the credit of input excise tax can be benefited against yield excise tax. In any case, the credit of VAT is not accessible against excise and the other way around. Since VAT incorporates excise tax, the issue of falling impact of tax-on-tax remains the same. Also, at the central level, Central Value Added Tax or CENVAT was presented CENVAT credit in which credit of tax is waged on inputs and capital goods just up to the fabricating stage; it doesn’t stretch out to the dispersion chain. Apart from this, it was not doable to genuinely apply VAT since all merchandise and ventures are not taxed at a similar rate across the nation.
Since GST wipes out this disparity by seeing no difference amongst goods and services; this infers with GST to come into action soon, tax avoidance won’t be conceivable by offering goods as services and taking undue tax benefit from it. Apart from this, GST guarantees that every one of the exchanges will be taxed at a similar rate in the nation. Moreover, as will be seen very soon, the new structure will include all the indirect taxeswhich are taxed by center and different states, which viably takes out plenty of tax on goods and services.
The year 2011, was just the beginning, in the budget session then, the 115th constitutional alteration bill was addressed in the Lok Sabha for imposing the GST tax on all goods and services apart from few specified goods which were supposed to be kept outside of the boundary of GST for the benefit of common public. As a result, the GST bill was passed in Lok Sabha in 2011 as the 122nd constitutional bill. And further in 2016, the bill was approved in the Lok Sabha as well.
The Goods and Services Tax (GST) – India’s greatest tax reform since autonomy –it came into force following 17 tumultuous years of open deliberation on 1st July 2017, bringing together more than twelve centre and state taxes however questions remained the same that if the move to a national sales tax will be with no problem or not.
The new tax regime was introduced at a late-night occasion in the memorable Central Hall of Parliament, recollecting the memories of the midnight ‘tryst with destiny’ in 1947. Honorable Prime Minister Narendra Modi named the new tax as “good and simple tax” that represents the economic-amalgamation of India. He proudly said during his announcement that “There are 500 sorts of taxes that assume their parts. Today we are disposing of them,” Prime Minister Modi said. “From the states like Ganganagar to Itanagar and from Leh to Lakshadweep, it is one nation, one tax.”
He further said the day denotes a definitive defining moment in deciding the future course of the nation, including GST would guarantee one nation, one tax. The GST, he stated, is a simple and transparent tax that will help in controlling the fraudulent practice and in keeping a check on generation of Black Money in the market.
Outed as the greatest duty change since Independence, the GST administration will affect costs of a huge number of products and enterprises. The GST Council, led by Finance Minister Arun Jaitley and containing his state partners, has effectively sorted more than 1,200 products and 500 administrations in impose chunks of zero, 5, 12, 18 and 28 for every penny. Here is a rundown of provisions where the GST frequency is lower than the present joined aberrant expense rates: Curd, lassi, flatter drain put in the unit holder, Dairy products, Dry Fruits, Tea, Wheat, Rice, Flour, vegetable consumable oils and on many more daily need items.