It has not been long since the upcoming Goods and Services Tax (GST) has been in news round the clock, and the secret lies in the varied changes that are going to come along with GST on July 1, 2017. So, here’s all that you need to know GST.
What is Goods and Services Tax (GST)?
Goods and Services Tax (GST) is basically an indirect tax which is applicable across the country, and is going to replace various taxes which are being levied by state and central government. With the view to combine various central and state taxes into a single tax, the GST is going to pave way to single taxation system and put a halt to double taxation.
Multiple taxes that are going to be effected by GST include central excise duty, entertainment tax, central sales tax (CST), value added tax, service tax, and octroi. All these taxes will be amalgamated into one single taxation system.
If you are a businessman, you will have to file three returns per month, and the number would increase in accordance to the trading of the business in more than one area. Not only this, you will also have to change your accounting system, which will have to comprise of one-time investment costs.
The tax levied on food items which earlier was 12.5% will now be 5%. Entertainment tax will decrease by 2%, transportation tax will increase by 3%, personal care tax would decrease by 10%, and communication tax will increase by 3%. Cereals, all raw food items including food grains and milk have been exempted from the application of GST.
With the implementation of GST India will follow the ideology of – “One Nation, One Tax”. However, if we talk about Punjab, the state Government has unanimously approved the GST. However, former Finance Minister, Parminder Singh Dhindsa doesn't seem to be very convinced.
“GST for state finances, I think Punjab is going to lose because taxes (state levies) like purchase tax, ID cess, PIDB cess, RDF with collection of Rs 5,000-6,000 crore will be subsumed in GST and then revenue of the state will come down. But for five years (after GST implementation), we do not need to worry as we will be fully compensated by Centre,”, said Parminder Singh Dhindsa while adressing the press.
“And now question arises what after five years. Whether the economy will grow to the extent that it will able to bridge the gap of our revenue, I am skeptical about it. I do not think it will be possible to bridge the gap of Rs 6,000 crore…For state finances, I think after five years, we may suffer financial loss,”, he further added.
Punjab is an agrarian state, and a lot is to be done to bridge the gap between the farmers and the consumers, let’s see if the upcoming GST has something to contribute towards the same.