‘The one nation , one tax reform ‘, as proclaimed by finance minister , Arun Jaitley under the Goods and services bill has finally been passed. The long awaited bill as first proposed by the then prime minister Atal Bihari Vajpayee , back in 2000, got passed in 2016 with the 122nd amendment bill introduced in lok sabha.
GST will bring an unified tax structure to reduce the tax margins of various centre and state levied duties such as excise duty, service tax, custom duty by centre and VAT, sales tax, entertainment tax by states. The multilevel burden at last bear upon consumers is estimated to go down at 18% from 27-35% excluding some, alcoholic liquor, petroleum crude oil, turbine fuel , GST committee will be deciding their rates.
The four tier tax rates GST centre, GST state, Integrated GST and exceptions are proposed to introduce later this year.
Although the reason to pull out such kind of tax is with a mission to generate revenue for government with transparency over online transactions, eliminating tax cascading effect however ” present discussion on two standard GST rates , a lower rate and a higher rate in addition to exceptions will make the design of GST complicated and increase the cost of compliance as well as cost of tax administration” said NIPFP(The National Institute of Public Finance and Policy), associate Professor Sacchidananda Mukherjee.
Source- NIPFP