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Towards GST
It has been sometime since the Indian Industry has been waiting for the implementation of GST. With Finance Minister’s announcements recently, it seems that this waiting period is nearing its end. An implementation at the beginning of April 2011 now seems a plausible reality, as the Central Government has reached an acceptable middle path with the states.
The new proposed Structure & why it is not optimum
What is being adopted in India is the dual GST structure – where a combination of Central GST & State GST will be levied separately. The manufacturer will have to submit both taxes separately, and he will not get cross-credits for the other. This is less than the optimum scenario of having a unified GST, which reduces complexities in filing tax and keeping track of separate credits. And it does not seem to necessarily reduce the burden of paperwork involved in interstate transfers.
The rates for goods and services too are not unified. It is 20% for all goods, 12% for essential goods and 16% for services. There are some goods like alcohol, tobacco products which are still not part of the GST regime. Again, this leaves some gaps in separately tracking each type of input and value add, and the ‘simple’ tax continues to carry complexities.
However, despite these shortcomings, the new regime offers many benefits which are worth exploring. At the same time, changing into a new regime is not without its challenges - something companies should keep in mind in view of the expected change.
Saving the compound effects of multiple taxes
There are many ways in which the GST or Goods & Services Tax will benefit the Indian Industry. Financially, some of the compounded effects of multiple taxation will be take
Last Updated On:7/4/2011 5:45:59 PM
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