Unveiling the GST Tax Rates

GST or the Goods and Services Tax is one of the much awaited and biggest tax reforms in India in last 70 years. GST claims to unify all the taxes levied throughout the country in a bid to eradicate inflation and induce economic growth. On 3rd of November, 2016, the GST council decided to get rid of the “the rich get richer and poor get poorer” catchphrase in India, as it revealed its four tier tax rates, applicable from the month of April.

So, what does the council has for the country folks?

The tax system has been categorised into four range i.e. 5%, 12%, 18% and 28% (steeper to the pre-proposed 6%, 12%, 18% and 26%). Let us apprehend them for a better understanding:

The 5% slab: The GST council has been very keen on eradicating inflation. as it has cut out the taxes levied upon grain and food (which constitutes up to 50% of the consumer inflation basket). To add more to it, the 5% tax slab is levied upon the common use products, in comparison to the earlier 9%.

The 12% & 18% slab: The two standard rates that would be applicable upon bulk items such as processed products, oils, soaps, etc. will be further categorised in the upcoming session as which commodity falls in which slab.

The 28% slab: The council has been keen on uplifting the economic equality, as the top percentile slab will be applied upon luxury and white goods along with tobacco and aerated drinks. An addition cess will also be implied on these goods to compensate for the rollout losses.

Another rate slab is yet to be decided for gold and other precious metals, which is likely to be around 4% (as proposed earlier). (Source: Economic Times)

Though these slabs are yet to be approved by the Parliament, the GST council has put their best foot forward to get rid of the indirect taxations in an attempt to gain a steady control over the administration of the overall tax system. 

Restrainers:

• An amount of 50,000 crore would be needed to compensate for the loss that the states had to bear from GST rollout, for which a lapsable clean energy cess and additional cess will be levied for the initial five years, said the Finance Minister. (Source: TOI)

• The service tax shoots up to 18% from the previous 15%.

• It may take a considerable amount of time for the governments as well as the common people to acclimatize with the new system.

However, these restrainers are momentary and assure long-term benefits for both the common man and the government. And, the council is more likely to get into training and testing mode in preparation of the new taxation system, that could be the game changer for a developing nation like India. 

Disclaimer: All the views, opinions and information expressed in this blog are those of the author and its sources and in no way reflect the principles, views or objectives of Sage Software Solutions (P) Ltd.

It’s a Go-ahead from Lok Sabha for GST

India moves an inch closer to the dream of a unified tax reform, as the Lok Sabha on Wednesday passed the much-awaited GST bill after an all day long debate in the Parliament. The four GST bills include CGST (Central Goods and Services Tax), Union Territory GST Bill, Compensation GST Bill and Integrated GST bill. The GST bills span across PAN-India except Jammu and Kashmir as of now.

The government is eyeing for the July 1 rollout date for the new tax reform to come into play. Arun Jaitley, Finance Minister stated, lack of diverse slabs in the taxation system would make the reform regressive, since all goods will not attract same tax rates.

He further added, “Some goods certainly are essential for the poor class. A pair of Flip-flops and a BMW cannot have same tax structure. What is the merchandise and who uses them, matters here. And, this is a revolutionary tax reform that is deemed to benefit people from all walks of life”.

Goods might turn ‘a bit cheaper’ once GST tax regime comes into place and all other taxes are bumped off thus, eradicating the cascading effect, said Mr. Jaitley.

The four-tier tax slabs are 5%, 12%, 18% and 28% as sanctioned by the GST council. The government has decided to set the maximum GST slab at 40%.

Talking about the tax slabs on petroleum products, Mr. Jaitley added that though the council has included petroleum products in the GST tax regime, as of now it will stay zero-rated. The council has decided to bring it on table within a year after the GST implementation.

The nature of financial activity today is undergoing rapid changes and the prime objective of GST tax reform is to promote ‘free flow of services and goods across the country with a unified tax reform’. The new tax system is expected to be efficient, difficult to violate and will have stringent compliances.

President, Pranab Mukherjee had earlier approved the GST bill in September 2016. The bill, which aims to reboot the country’s intricate taxation system by substituting 17 different tax types with a single and unified levy, was sanctioned by the Rajya Sabha in August 2016. Whereas, the Union Cabinet sanctioned the GST bills in March.

The real purpose is to safeguard the consumers from inflation after the GST implementation. However, industry experts and business owners across the country are requesting to postpone the targeted implementation date i.e. July 1 to allow them to brace adequately for the GST tax rollout.

Disclaimer: All the views, opinions and information expressed in this blog are those of the authors and their respective sources and in no way reflect the principles, views or objectives of Sage Software Solutions (P) Ltd.

Source: SME Times and Pragativadi News

Rajya Sabha gives thumbs-up to all four GST Bills, Govt. determined for July 1 Rollout

The parliament on Thursday took the most decisive step, as it passed all the four GST bills clearing the path for July 1 rollout for the revolutionary and unified tax system i.e. GST (Goods and Services Tax).

Rajya Sabha cleared The Union Territory GST Bill, 2017, The GST (Compensation to States) Bill 2017, The Integrated GST Bill, 2017 and The Central GST Bill, 2017.

The nation moves an inch closer to fulfilling the one-country-one-tax reform. The historic decision comes after the Lok Sabha cleared the four GST bills in parliament on March 29.

Arun Jaitley, Finance Minister asserted that once the new tax reform comes into play, harassment of organisations by diverse authorities will cease and we will have one tax rate for one commodity/merchandise all throughout the nation.

Read also: 4 Reasons your Business needs an ERP System to be GST Ready

In response to the 8-hour long debate in the parliament house, Mr. Jaitley besides giving credit to the former UPA government for their GST efforts added that the new tax regime will bring in a uniform and indirect tax system in the nation and won’t trigger inflation as conceived by certain sections.

“I have no hesitation in conceding that it is a collective property,” Mr. Jaitley stated. Further, he added that GST would not only benefit trade and industry, but will also benefit states and centre as well. The GST council is eyeing May 17-18 dates to approve the final rates and rules paving way for July 1 rollout.

The Rajya Sabha sanctioned all the four GST bills after intense negations over a number of amendments by the opposition parties.

With the parliament giving green signal, the obligation is being shifted to states that are now required to approve the state GST rules in respective state assemblies.

The Centre has already issued detailed rules for the purpose of stakeholder consultations. Whereas, the GST council is set to take up the remnants of this revolutionary tax reform next month to fix individual tax rates for goods and services.

The GST council on November 2016 has already decided a four-tier rate structure – 5%, 12%, 18% and 28%. Most goods are anticipated to fall under the 12% and 18% bucket, whereas a cess would be imposed on sin and luxury goods. The GST law allows a maximum tax rate of 40% (20% of which would be state GST and 20% would be central GST).

Mr. Jaitley took to twitter to express his gratitude: Here’s what he tweeted on the historic decision:

With regard to Jammu and Kashmir, Mr. Jaitley stated that the bill passed by the Rajya Sabha won’t be applicable to the state due to Article 370. However, Jammu and Kashmir will need to pass its own law for integrating the GST reform.

Also as regards to the various concerns put forth by the members of parliament on the GST network, IT brain, etc. Mr. Jaitley stated that the entire GST structure has been designed to recruit the best talents, as it would be handling millions of tax vouchers each month.

In another stint, the Lok Sabha on Thursday approved a bill in an effort to make customs and excise act compliant with the GST regime. This bill aims to get rid of the current cesses that would be incorporated into GST.

Disclaimer: All the opinions, information and views expressed in this blog are those of the authors and their respective sources and in no way reflect the principles, views or objectives of Sage Software Solutions (P) Ltd.

Source: Deccan Chronicle and The Economic Times