The realisation of a common indirect tax is critical for the semblance of a common Indian market
The implementation of GST could very well be a step in this direction, in untangling the complicated web of the indirect tax base in India. However, one may add here that, the imposition of the GST (from July) is a minor step in the direction of reducing the incidence of indirect taxes in relation to the overall tax burden.
The probable impact of GST?
It may be difficult to realistically depict a quantifiable impact of GST across various sectors unless a specific GST tax rate is known from the government’s end, which analysts earlier estimated to be somewhere around 17% or 18%.
Considering that the discussion across the board on the GST tax rate started with rate discussions of 12% and 18%; the four slab rates of 5%, 12%, 18% and 28%, with identified de-merit goods subject to levy of cess over and above peak rate of 28% was a dampener for the industry, as argued here.
The newly designed multiple rate structure is derived from the fact that current effective indirect taxes (both centre and state) over certain bands are maintained for revenue neutrality and linked to above rate slabs.
The likely winners from the imposition of the GST as a centralised indirect valued added tax, will be from the manufacturing segment, including the automobile manufacturers, the FMCG (Fast Moving Consumer Goods) segment, the retail sector (provided consumer demand picks up) and the cement sector. Income Tax.
One of the key losers could be the telecom sector, with the rise in GST tax rate, unless the VAT and CENVAT simultaneously see a marginal drop in their rates too. The sector is already plagued with serious problems pertaining to data volumes and slow bandwidth penetration across the country.
Tax reforms like the GST is history in the making and the final passing of the GST bill (now in its final stages) will be termed as one of India’s biggest legislative success... read more...
It may be difficult to realistically depict a quantifiable impact of GST across various sectors unless a specific GST tax rate is known from the government’s end, which analysts earlier estimated to be somewhere around 17% or 18%.
Considering that the discussion across the board on the GST tax rate started with rate discussions of 12% and 18%; the four slab rates of 5%, 12%, 18% and 28%, with identified de-merit goods subject to levy of cess over and above peak rate of 28% was a dampener for the industry, as argued here.
The newly designed multiple rate structure is derived from the fact that current effective indirect taxes (both centre and state) over certain bands are maintained for revenue neutrality and linked to above rate slabs.
The likely winners from the imposition of the GST as a centralised indirect valued added tax, will be from the manufacturing segment, including the automobile manufacturers, the FMCG (Fast Moving Consumer Goods) segment, the retail sector (provided consumer demand picks up) and the cement sector. Income Tax.
One of the key losers could be the telecom sector, with the rise in GST tax rate, unless the VAT and CENVAT simultaneously see a marginal drop in their rates too. The sector is already plagued with serious problems pertaining to data volumes and slow bandwidth penetration across the country.
Tax reforms like the GST is history in the making and the final passing of the GST bill (now in its final stages) will be termed as one of India’s biggest legislative success... read more...
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