What is the motto of GST?

What is the motto of GST?

On 30 June 2017, during a special parliament assembly at night, Indian Prime Minister Narendra Modi addressed the nation and launched the Goods and Services Tax (GST) in the central hall, where first Prime Minister of independent India Jawaharlal Nehru delivered his famous ‘tryst with destiny’ speech on 15 August 1947. Just like Nehru’s speech, which was delivered on momentous occasion of India gaining independence from British and emphasized on a new beginning for the country; at the stroke of midnight 1st July 2017, India freed itself from shackles of an obsolete tax system with implementation of GST across different states and the motto of  ‘one country, one tax, one market’ finally becoming a reality.

Seen as one of the biggest tax reforms (in terms of indirect taxes) since 1947, GST is set to bring forth unprecedented transformation of the country from a political union to an economic union of 29 states and 7 union territories. Under this fabled tax system, existing in developed countries such as France, U.K and Canada, the tax payers in India will pay a consolidated tax instead of the plethora of taxes such as Value-Added Tax (VAT), Central Excise, Service Tax, Entry Tax or Octroi, Customs Duty, Central Surcharge & Cess, Luxury Tax, Entertainment Tax, and Purchase Tax and a few other indirect taxes. Thereby helping to consolidate, streamline and make easier and more effective the process of indirect taxation.

GST will be payable at the final point of consumption on the price of goods and services; termed as a “transaction value.” This transaction value or actual paid price, while buying the good or service, will include packing cost, commission, and all other expenses incurred for their sales. To start with, the GST Council has finalized four tax rates slabs of 5%, 12%, 18% and 28% for goods and services. Education, healthcare, milk products and alcohol will continue to be exempted from tax in the upcoming GST regime. Similarly, gold and rough diamonds do not fall under the current rate slabs and will be taxed at 3% and 0.25% respectively.

Commenting on the imposition of GST Rajkumar Jalan CEO of Indiaonline.in said "GST is absolutely going to help the economic growth of the country by efficient tax collection. There is no doubt that this is a great step… For us, there has just been a marginal increase of taxes from the current 15% to 18%, which in our case, does not mean a burden to our end-users."

Prior to implementation of GST, for example entrepreneurs having business interests in seven states would have to deal with seven different tax authorities along with seven different tax rates in value added tax (VAT) paid by them. However, while filing for GST, they have to execute only two types of registration, one for State-GST and another for Central-GST. Also, with GST all states in India will have the same tax rate, which will bring down the logistics costs for many businesses. Thus at this juncture the Indian startup community stands to gain considerably from the implementation of GST.