Goods & Service tax (GST) is a land mark change in the way business is done in India.
GST in the current form has tried to organize the highly fluid space of Indirect taxes which are currently being levied on supply chain both by the central union government and the state government. Some of the central and state indirect taxes currently being subsumed in GST are Central Excise Duty; Service tax; Central State Tax; Value Added tax; Entry Tax; Purchase Tax; Luxury tax etc.
It is widely expected that with this tax reform, Indian economy will take an upward swing and it will greatly ease the business woes of trades and industries. Inflation is also expected to go down in the long run.
The sentiment is also echoed by other international agencies. Like IMF(1) has said that the adoption of GST could raise India’s medium-term gross domestic product (GDP) growth to over 8% and create a single national market for enhancing the efficiency of the movement of goods and services.
World Bank(2) is of the view that the efficiency gains that GST will achieve and the fact that the information generated through the GST on spending patterns will facilitate enforcement of personal and corporate income taxes, the impact of the GST introduction on equity and poverty should be positive.
Similarly, Asian Development Bank(3) has said that Indian economy will grow @ 7.4% this fiscal and 7.6% in the next as the GST laws will help create a better business friendly environment.
Implementation of GST has a major advantage of streamlining of various indirect tax regulations prevailing on the supply chain in India by ensuring that tax is only levied on value added portion of transactions and cascading effect of central taxes not being available as an input against state taxes is removed.
The Indian GST regime has prescribed various rules and regulations related to taxable events, chargeability of relevant tax i.e. CGST & SGST/ UTGST or IGST ,mixed & composite supplies, reverse charge, composition scheme, registration, e-commerce operators, Non-resident and casual taxable person, valuation of taxable supply , input tax credit , Zero rated supplies , time of supply & payment of tax , tax invoice , returns and compliances, refund , penalties & prosecution , transition provisions, assessment & audits , appeals , advance ruling , anti-profiteering measures, exemptions & tax rates etc.
GST rates for goods have been categorized into Nil, 0.25%, 3%, 5%, 12%, 18% and 28%, while for services there are four rates i.e. 5%, 12%, 18% & 28%. Eighteen services are identified under reverse charge mechanism, while 83 services have been exempted.
With Indian GST to be rolled out on 1st July 2017, overall the government has made an effort to mix the features of erstwhile indirect tax laws and have come up with a balanced law to cater to a very huge and diverse market such as India. It is still to be seen how this innovative and land mark fiscal reform would be implemented on complex supply chains prevailing in India. GST if implemented successfully will promote further ease of doing business in India.
GST is likely to revolutionize the way India does business. The GST regime is set to be introduced in India effective July 01, 2017. Businesses are gearing up to assess the wide-ranging impact and adapt to the new regime. The current supply chain structures and pricing arrangement will need a re-consideration. With information continuously evolving on the largest tax reform which is bound to take place, the need to be updated and disseminate the Enterprise tax positions across teams and people is imperative.
TPA Global and its Indian TPA alliance partners i.e. Nangia & Co. LLP New Delhi, Ashok Maheshwari & Associates LLP New Delhi and Accretive SDU Bangalore, can help you with innovative and technology based compliance solutions to complex regulations in Indian GST. We can also help you to assess the Impact of GST on your business. The Impact Analysis of GST on your business might help you to get well equipped with various facets of GST.
Please get in touch with us for further details regarding GST.
TPA Global, The Netherlands
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TPA Global, The Netherlands
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Ashok Maheshwary & Associates, India
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Nangia & Co, LLP, India
T: +91 9910 236 989 or + 91 120 259 8000
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