Benefits of gst 1 subsumes many taxes into one 2 does

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Benefits of GST 1. subsumes many taxes into one. 2. does away with levies on inter-State transactions 3. higher GDP growth 4. lower inflation 5. buoyant tax collections 6. wider coverage 7. less tax evasion, 8. a truly common economic market across the country. Indeed the slogan for promoting the GST was " One Country One Tax ". Steps taken: The origins of the GST go back almost two decades and are also found in the reports of the Kelkar Committee on Tax Reforms , written at the turn of this century. The basic premise of tax reforms then and now is to aim for lower rates, simpler code and eliminate exemptions . On all these three goals we have much distance to travel. For the roll-out of this historic reform steps already taken are: 1. amending the Constitution, 2. legislative action in Parliament as well as State legislatures, 3. setting up of the GST Council and 4. deciding on the applicable tax rates on more than 1,200 items. Concerns: 1. With five slabs of 0%, 5%, 12%, 18%, 28% plus cess , we have increased the chance of classification disputes, discretion and litigation . 2. It is extremely complex because of the number of tax rates being levied and, second, because each State is being treated as a separate tax jurisdiction . 3. The high rates encourage tax evasion, distort decisions, and promote wasteful resources into tax avoidance.
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32 | Page 9004418746 [email protected] 4. As the GST Task Force of the Thirteenth Finance Commission has said, multiple rate slabs exacerbate the problem of bracket creep and classification disputes . 5. A rational tax system should have very few rates and low rates. 6. Indeed, before the introduction of this GST, the service tax had just one rate, that was 15%, applicable to all services . 7. Since almost 60% of India's GDP is from services, and the rate is moving from 15 to higher, it is quite likely that inflation will inch up. This is especially evident in the financial, telecom, hospitality and trade services. Of course, to the extent that service providers will now get input tax credit, which they might pass on to their customers, inflation may not rise by much. 8. Since the IT systems are not fully in place and refunds are not instantaneous, the benefit of tax credit will be delayed. This cost of delay and consequent cost of working capital too introduces an inflationary element. Also, a large part of the economy is still not covered by the GST. Potable alcohol, crude oil, natural gas, aviation fuel, diesel, petrol, electricity and real estate are currently out , and States will levy their own taxes on these. GS III: ECONOMY – POLICY 21. If the mistakes of the past are a guide, the purpose of the Air India sale bid should shape the rules. Discuss. Earlier attempt to Air India’s disinvestment Air India’s disinvestment, first attempted by the Atal Bihari Vajpayee government, is being revived.
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