New Delhi, June 30: The single biggest tax reform- the Goods and Services Tax (GST) in the history of the nation has now become a reality. India’s tax regime witnessed an overhaul at midnight when the Narendra Modi government launched the Goods and Services Tax (GST) in the Central Hall of Parliament at 12 AM. The Central Hall was packed with top dignitaries including Prime Minister Narendra Modi, his Council of Ministers, President Pranab Mukherjee, Lok Sabha Speaker Sumitra Mahajan, Vice President Hamid Ansari, BJP president Amit Shah.for the GST launch event which started at 11 PM on Friday night.
The much-anticipated tax regime kicked in after speeches by President Pranab Mukherjee and Prime Minister Narendra Modi and continued until midnight. The GST implementation is believed to unifying India’s USD 2 trillion economies and 1.3 billion people into a common market. As the government geared up for the implementation of the ‘One Nation One Tax’ roll out, tight security was witnessed outside Parliament.
What is GST
GST is one indirect tax for the whole nation, which will make India one unified common market. It is a multi-stage, destination-based tax that will be levied on every value addition. The tax regime which was initiated by the UPA government has been put into force by the Narendra Modi government tonight. GST is believed to replace the current indirect tax system and will replace a mix of more than a dozen state and central levies built up over seven decades with a one national GST.
History of GST
The Goods and Services Tax (GST) was first discussed in the Kelkar Task Force report on indirect taxes in 2003. After seven long years, a proposal to introduce a national GST by April 1, 2010, was first mooted in the Budget Speech for the financial year 2006-07. The idea of GST was bogged down for years in bipartisan debate, with political parties in government trying to push it and those in opposition pulling it down.
Who is eligible to pay tax under GST
GST is leviable for businesses and traders who see their annual turnover above Rs 20 lakh (Rs. 10 lacs in 11 special category States). For computing, aggregate supplies turnover of all supplies made by you would be added. A person dealing with 100% exempted supply is not liable to register irrespective of turnover. This means that if someone trades only 0% GST items like grains and pulses, then the trader is not liable to pay the tax. The threshold for paying GST is Rs 10 lakh in the case of northeastern and special category states. The indirect tax regime is applicable on interstate trade irrespective of this threshold.
The Indian parliament was lit up to mark the launch of ‘biggest economic reformation since Independence’. Prime Minister Narendra Modi, his Council of Ministers, along with President Pranab Mukherjee would be present for the GST launch in Parliament’s Central Hall, where lawmakers and legislators of all parties were invited.
How long can I wait to register for GST?
An unregistered person has 30 days to complete its registration formalities from its date of liability to obtain registration.
Which existing taxes are subsumed into GST?
Taxes including central excise duty and additional excise duty, import duties, service tax, central cesses and surcharges, state taxes like value-added tax (VAT), Central sales tax on inter-state trade of goods, luxury tax, entertainment tax except those levied by local bodies, taxes on advertisements, surcharges on supply of goods and services are subsumed into GST.
Which products don’t fall into GST
Few products have been temporarily kept out of the indirect tax regime. The GST Council will decide to bring crude oil, diesel, petrol, natural gas and jet fuel into GST. Also, liquor is kept out of GST as a constitutional provision and hence it would require an amendment to Constitution if the GST Council has plans to bring it into GST net. If an individual is not liable to register under GST but has was registered under Service tax can apply for cancellation of Provisional ID on or before July 31, 2017.
The Opposition parties that include Trinamool Congress, Indian National Congress, Left parties and the DMK officially boycotted the GST launch. Union Finance Minister Arun Jaitley urged Opposition parties to revisit their decision to skip the GST launch. Jaitley said that all the members of the Opposition Parties were consulted on the indirect tax reform. A day before the launch of most sweeping tax reform GST, Jaitley said, “I hope every political party will reconsider and revisit its decision” on not being a part of the GST launch in Parliament.
The implementation of GST is believed to add 0.4 per cent to 2 per cent to GDP growth. The government has opted for four slabs for both goods and services which are 5%, 12%, 18% and 28%. The government has promised that once GST is rollout across the nation, the transition to a single, nationwide tax on goods and services will streamline business and boost the economy by tearing down barriers between 31 states and union territories.