The Goods and Services Tax (GST) replaces more than a dozen federal and state levies and unifying a $2 trillion economy and 1.3 billion people into one of the world's biggest common markets. With GST implementation, all the states are slated to gain immensely as they shall now get equal opportunities of development.
The state BJP leadership feels that such workshops will also be utilised to counter West Bengal chief minister Mamata Banerjee's charge regarding GST. I wonder what he would have said had he seen the multiple taxes that were applied here, the PM said on a lighter note. Both Prime Minister Narendra Modi and President Pranab Mukherjee congratulated all political parties including the previous governments.
Businesses are nervous about GST, which sets out four different rates of between five and 28 per cent instead of the one originally envisioned.
One of India's most ambitious economic reform plans in 70 years will ultimately boost tax receipts and provide simplicity for businesses, but the true impact may not be felt for at least a decade due to implementation challenges, experts said. However, it said businesses have been asking for more time to implement changes as they are anxious of being not ready for a switch to the new system.
Mukherjee also said the new era in indirect taxation was the result of a broad consensus arrived at between the Centre and the states. Many people think not paying tax is their fundamental right.
However, the Reserve Bank of India and the Finance Ministry seem to have studied the GST or some form of Value Added Tax (VAT) in few more countries while GST Council was busy to make the new tax regime a reality. Here too inflation rose after switching to new tax regime.
Government and business leaders attended a midnight ceremony to launch the tax at the Indian parliament's Central Hall. However, numerous services such as mobile phone services, healthcare services as well as transportation charges are expected to attract a tax rate of 18%, which is 3% more than its current 15% tax rate. "We feel the wait is worth it", said senior minister Naeem Akhtar. "You are using the roads and other amenities of the government. country and therefore this government does not believe in allowing not paying taxes", Jaitley told an event hosted by India TV, a day after the GST roll out.
"Although it is still far from flawless, we realise how much better it is than the myriad taxes we've been subjected to over the last several decades", said Pratik Jain, Partner and Leader Indirect Tax, PwC India.
However, cheese is also now common in an Indian household, but it will still be charged at the rate of 18%, which will certainly increase in price under GST.