All You Need To Know About GST

Let's Know About The GST Bill

GST, 122nd Constitutional Amendment Bill, 2014 is that magic trick which will vanish around 12 billion taxes across the nation. You hear it right we have more taxes than people, around 12 taxes per person to be precise. GST is a single, VAT to be levied replacing all indirect taxes levied by centre and the state.

Quick Facts

1) France was the first country to introduce GST system in 1954.
2) More than 140 countries have implemented GST.
3) Alcoholic Liquor remains exempted from the GST ambit.
4) GST not applicable to crude oil, high speed diesel, petrol, natural gas, aviation turbine fuel as of now.
5) The bill had a 13 year long journey as it was first discussed in UPA regime in Kelkar task report on Indirect Taxes in 2003.

WHY WAS SUCH A GOOD POLICY STUCK?

     Because of the following "VIVADS":

   Vivad 1 - TAX RATE

GOVERNMENT: In favour of a revenue-neutral GST rate of 20% to 22%
OPPOSITION : Wanted it to be clapped at a lower rate of 18%
p.s - A lower rate would lead, according to opponents higher compliance. The dispute was resolved when the cabinet guaranteed 100% compensation to states for 5 years to make good any revenue loss incurred by them due to introduction of GST.

Vivad 2 - LEVY ON INTER-STATE SALES

GOVERNMENT: 1% additional levy that will compensate manufacturing states that will lose revenue to consuming states.
OPPOSITION: Wants this levy to be dropped.
p.s - This dispute was resolved after the Cabinet removed this contentious provision.

Vivad 3 - GST RATE ON STATUTE

GOVERNMENT: Needs flexibility to change the rate if the situation demands.
OPPOSITION: Wants the 18 percent GST cap to be put on bill itself.
p.s - While putting a cap it will ensure that states do not arbitrarily jack rates, the government does need the flexibility to tweak rates if needed.

Vivad 4 - TOBACCO, ALCOHOL & ELECTRICITY

GOVERNMENT: Has kept out these goods at the insistence of states that tax them heavily.

OPPOSITION: Keeping some goods out distorts GST structure.

p.s. - While GST should be an inclusive tax the government can include these goods gradually in stages.

So finally when these Vivads get sorted, congratulations, today you have your life sorted as you pay just one kind of tax.