What Will GST Actually Do For The Public?

What Will GST Actually Do For The Public?

For the individual, the passage of the long pending and contentious GST Bill, if and when it becomes reality, after a decade in the works, should mean savings from lower prices for a host of goods and services.

This even though the consumer will pay the tax now, but still find everything less expensive.

Former West Bengal finance minister Asim Dasgupta, who headed the  original panel of state finance ministers set up to give contour and shape to the GST Bill said ‘The strength of the GST lies in avoiding the continuous levying 0f taxes from producer to consumer.’

This, as long as the corporate body or trader making savings from the elimination of multiple taxes, passes it on to the consumer.  

However, the proper implementation of the GST is expected to usher in something of a consumption boom.

The advent of a unified Goods & Services Tax rolling out, will, in time, boost GDP by an estimated 2-2.5% per annum.  

The GST is intended to do away with multiple points of layered taxation that makes our goods and services both expensive and uncompetitive. Instead, all the taxes will be levied, those due both to the centre and the state, only at the point of eventual sale.

The tax, expected to be around 15-18% on cost of manufactured goods or services alike, will be calculated upon the manufacturing cost, or basic cost of the service.

But since manufacturing is a complicated process at every stage, the GST will work on the principle of the value-added. Similarly, for specialised services, that  are also not that easy for a layman to understand.

 Tax compliance will increase because of GST. Exemptions will be minimised in the interest of continuity; and the tax-base will expand.  

Prime minister Narendra Modi, perhaps sensing that the long journey towards enactment of this transformational law is almost at an end, recently said no political party should ‘commit suicide’ by resisting the enactment of GST any further.  And yet he himself refused to be boxed into a ‘deadline’, and said he preferred to think of a ‘lifeline’ instead.

With growing numbers for the NDA  in the Rajya Sabha, and a broad consensus emerging in favour of the GST amongst a majority of states and regional parties, the government is, once again, doubly hopeful.

The virtual isolation of the ostensibly softening, but still resistant Congress, means the Modi government has every chance of working with the remainder of the opposition to finally pass the GST bill. Many states are in favour, but mainly in anticipation of the additional income.

The GST Bill is expected to go through during the forthcoming Monsoon Session of parliament, commencing July 18^th. Assuming that is what happens, the implementation should begin early in 2017.

For : ABP LIVE

July 6^th, 2016

(457 words)

Gautam Mukherjee