Silent Features of Goods and Services Tax Bill 2014
Services Tax Bill 2014 The federal structure of India that we share in our economic times, the government’s proposal aims at ‘unifying’ the Indian trade market and bringing about an eventual ‘uniformity’ in the taxation system. The Goods and Services Bill, 2014, popularly known as the 122ndConstitutional Amendment Bill, 2014, would be an ultimate solution to the cascading problems in India. It shall be a dynamic restructuring policy in the arena of taxation.
Amongst the bill’s varied salient features, the passing of the Bill shall result in the insertion of Article 246A and Article 279A, whereby the Centre and the State shall be conferred with concurrent powers to legislate on the issue of taxation and for the creation of a joint forum known as a Goods and Services Tax council (GST).
The GST shall be levied by Centre on imports and interstate trades. The bill also empowers the Central Government to impose an additional tax of 1%. This tax reform is based on a theory of “destination-based tax,” where the tax is collected on the final consumption of goods. In the case of exports, there shall be a zero-tax policy, due to the application of destination-based tax, where a good must be taxed where it is being consumed. Analytically there shall be a uniform tax rate levied on the goods and services without any differentiation only at the time of consumption of the final product. All goods and services shall be taxed uniformly, without any exceptions unless expressly shownsubsuming all other taxes such as the excise tax, service tax, etc. Thus, GST is an umbrella tax.
The most important influence of GST shall be that the cascading effect of double taxation is anticipated to considerably go down impacting the tax regime positively by rationalizing it. The rate of taxation would be two-tiered apportioning of it into one for necessary items and the other for goods in general. This would carve an exception in the list by allowing for a special rate for precious metals and another list for exempted items. WHY STARTUPS
The most debated issue under GST Bill has been the goods that may be exempted from the same. Liquor for human consumption is exempted from the purview of GST whereas other petroleum and alcoholic commercial products are subject to the levying of GST. The government has also taken into account the rare case where states may lose revenue due to implementation of the GST, in which case the parliament by law shall provide compensation to such a state. This provision for supporting the state is caveated for a term of five years.
Administratively, the Centre and the State, both shall have control over GST as the Centre would collect GST Centre and the State shall collect GST State. All taxpayers shall be allotted a PAN linked identification number with 13-15digits. This would synchronise the GST PAN linked system with the contemporary PAN Card based tax collection. This shall be an infrastructural change on part of the Income Tax department.GST shall be a boon to the Indian economy if implemented in time but seems to be a herculean task to achieve implementation by April 2016.