GST and its impact on YOU!

swatkats

Skilled
Been tracking this GST thing, I was expecting this percentage around 16% but looks like its 18%

Corporates are all excited be it any sector, As it will simplify the tax structure.

But.. Whats in there for YOU and ME?

-Service tax hiked from 15% to 18%
-CST on ecommerce 5.5% could be hiked to 18%?
-VAT is anyway 14.5% which will be 18%.

I agree with the idea of GST but percentage should have been definitely 15 or 16% max.

Correct me if I'm wrong but i don't see any use for me, Except for the fact that corporates will enjoy less taxes and there is Zero hope that they'll pass on the benefits to the consumers.

Not covered under the GST purview:

1. Petroleum products

2. Entertainment and amusement tax levie
d and collected by panchayat /municipality/district council

3. Tax on alcohol/liquor consumption.

4. Stamp duty, customs duty

5. Tax on consumption and sale of electricity



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swatkats

Skilled
Textiles, IT and Telecom industries will take a big hit. With Inflation, prices go up & up & up but the manufacturers will never lower prices and will try to increase their margins.

Also, Customs duty rates are not going to be under GST. How will prices come down?
 
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read somewhere that a lotta developed countries have gst rate of 16% and emerging ones 14%. even sensex reacted badly though it has been on a high since a few months now so would shed soon anyway
 

swatkats

Skilled
Don’t listen to the politicians. Here's why the GST might actually end up harming India

Few Excerpts:
It’s easy to see why Jaitley likes the tax. The GST is paid by the end-consumer, which makes it difficult to evade and easy to administer. It’s also a sledgehammer tax, levied on everyone, rich or poor (unlike an income tax), which usually results in a lot of money for governments. The tax also helps the Union government become more powerful – using the council, it can now control tax rates in the states.
If states don’t get to control their funding (i.e. taxes), it leads to what economists like to call the “preference revelation problem”. There is no way, for example, for Tamil voters to signal if they want more or fewer public services from Chief Minister Jayalalithaa, given that under the GST, she cannot even change tax rates. Tamil Nadu can only get more money if it convinces the GST council to raise rates.

The GST is great for the Union government and large corporations; but things start to get a bit more complex if the entire country is considered. If abolishing state taxes were some sort of silver bullet to creating efficient markets and economies, one would have thought the United States – the largest capitalist economy in the world – might have at least considered it. But it doesn't. Not does the second-largest common market in the world, the European Union.
Except that the GST might not really end up creating a better climate for business. In fact, it might even end up making things worse.

GST supporters point to that fact that the tax would simplify tax collection, making India a unified market. That’s true but the unintended consequences of all states having the same tax rate might make things more complex than that.

For one, manufacturing states would lose out, given that GST is a destination tax collected in the states where the product is purchased. Tamil Nadu, one of India’s manufacturing powerhouses, for example, has sent the Union government a rather tart note opposing the GST for this reason. “It is expected that the extent of revenue loss under GST would be around Rs 9,270 crores,” it points out.

http://scroll.in/article/813004/don...y-the-gst-might-actually-end-up-harming-india
 
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I am no expert in this topic, just an idler with too much time :)

The scroll article is not correct, heres the link:
http://scroll.in/article/813004/don...y-the-gst-might-actually-end-up-harming-india

For starters, the author is known for his, to put it mildly, anti-current majority party view view. So he compares us to EU and US. Not to mention that jibe at Jaitley, maybe last 10 yrs of UPA trying to pass the bill, don't exist.

Still I think some of his answers on state taxation etc can be answered here:
http://pib.nic.in/newsite/PrintRelease.aspx?relid=148240

check "state gst".
 
Simplified taxes will have indirect benefits.
Companies with more money tend to invest more in the local markets and thus more jobs and economic activities.

From 30% of the taxes now down to 18% that's 12% more money in the pocket. win-win for everybody.

In order to really compete in the world (manufacturing) then Simplified taxes are the need of the hour not where you need to pay tax to 10 different organizations every 25 kms or so.
 

Party Monger

Skilled
GST is not the only way to simplify tax. Infact far from it. In other countries you get Bank accounts in 10 mins. You get various tax registration in less than a day. Even in case of multiple registrations there is a common interface. In india they take weeks. You dont need GST to simplyfy that. If i want to do busines and whatever GST number they make if it takes a month to come, there wont be any ease of business.

I hope you get my point. When i take that a single tax is okay, the primary compliance problem is from the govt's end where they have systems that take ages. That attitude has not changed in the Modi govt. They take 4 forms of Company registration and make it into 1 form with 4 parts. Takes the same amount of time and same amount of info and then they say they have simplified it. Its just fooling people.

What I dont understand is what holds these people back from having systems with very low turnaround times. Its not like they dont make mistakes now, or corruption has lowered or that they do a lot of background check. Its not even funny. Takes ages to do stuff for no reason apart from govt apathy.
 

rakesh_ic

ex-Mod
GST is not the only way to simplify tax. Infact far from it. In other countries you get Bank accounts in 10 mins. You get various tax registration in less than a day. Even in case of multiple registrations there is a common interface. In india they take weeks. You dont need GST to simplyfy that. If i want to do busines and whatever GST number they make if it takes a month to come, there wont be any ease of business.

I hope you get my point. When i take that a single tax is okay, the primary compliance problem is from the govt's end where they have systems that take ages. That attitude has not changed in the Modi govt. They take 4 forms of Company registration and make it into 1 form with 4 parts. Takes the same amount of time and same amount of info and then they say they have simplified it. Its just fooling people.

What I dont understand is what holds these people back from having systems with very low turnaround times. Its not like they dont make mistakes now, or corruption has lowered or that they do a lot of background check. Its not even funny. Takes ages to do stuff for no reason apart from govt apathy.
I feel the primary cause of any delay is lack of proper system - Global system within India. Most of the govt activities are still isolated and arent connected to a single entity at all. We have the advanced IT sector here but no integrated system within the govt. As a result, every activity/transaction with the govt takes weeks to complete. The banking system has evolved and is really doing good compared to some of the developed nations like UK in terms of ease of use to the end user etc. but we still lack the systematic approach at many places like creation of an account, cheque clearances etc.
 
I have been spending some time to understand this thing a bit more. And aside from the media frenzy, not much has happened on GST.

The Indian structure gives the sales tax power to Indian states. There was no concept of a centralised tax. The amendment passed in Rajya Sabha recently, was about a constitutional amendment which makes GST possible. Thats it, nothing more. But given the op-eds and talk about 18% extra one would feel as if GST is passed.

Now this bill has to go to LS, get approved, then brought to the states. 2/3 of the states have to agree to this and then it becomes a finalized amendment.

Only once it has been done, that the actual GST bill can be tabled and can talk about rates etc. At that time there is surely going to be a much bigger fight. Congress talking about 18% cap in constitution. States asking for more money and perhaps taxes even pushing for 20% or even asking for some taxes of their own outside the gambit of GST. This thread would gain more relevance at that point of time.
 
The constitutional amendment bill goes to Lok Sabha today:
http://www.ndtv.com/india-news/gst-bill-back-in-lok-sabha-today-pm-likely-to-intervene-1441444

One thing to note:
Congress, the main opposition party, has issued a whip to all its members and has pledged support to the bill. But the party is again likely ask for a categorical assurance from the government that it will not introduce the two upcoming central GST Bills as money bills.
Money bills are about taxes or funding by the government. Money bills are introduced only in LS and any changes need to be ratified by LS. RS, where BJP doesn't have a majority, cannot modify rather just give suggestions. So while GST is a tax and a money bill, Congress wants to have a say in the upper house. This shows appropriately what is going to happen with GST going forward.
 

Lord Nemesis

Overlord
Skilled
If other parties didn't have any say at all, the GST would have been set at 27% as originally desired by govt (BJP) before they changed tune. Having interference for such bills is not really a bad thing. While none of the parties involved including the ruling party ever have the best interests of the country and people in mind when introducing bills, the process involved to some extent ensures that one sided craziness doesn't become law. On the other hand, perfectly sane bills may also hit road blocks.
 

vivek.krishnan

If you cant see the green dot, I'm offline :P
Skilled
I am no expert in this, but there would be a balance and counter balance for each and everything. If the GST ends up being very expensive, then black money will just increase, and people will maintain two sets of books. There will always be one side for lowest or zero tax, and one which says max or higher. The challenge is to find the middle line.
 

6pack

ex-Mod
None of the finance ministers are people friendly. The only reason GST is being pushed like this is so that the Govt can put few more extra taxes in it and make peoples lives more miserable. In the end no one is going to roll back prices. Companies and distributors to retailers (if they get profit will keep it with them) and the common man will be left with the empty bag.
 

Lord Nemesis

Overlord
Skilled
To be honest, Service tax is one tax that affects a vast majority of population and apparently comprises a fair chunk of indirect tax revenues. GST is a sneaky way to increase service tax by at least 3% in a single go instead of increasing it in the form of this and that cess as they have been doing.

Further, the more worrying fact is whether there will be any consistency in regard to having a single tax in practicality or whether it will be just on paper. We are already hearing of exemptions for GST. So there is nothing stopping the govt form creating more exceptions to GST to tax at a higher rate while using the GST only for cases where the tax rate is previously low. For example, a tax which was 6% earlier would be hiked to 18% in the name of GST and a tax that is at 30% would given a exemption from GST purview so that it can still be 30%.

Similarly what is going to stop the stop the state/central govt from selectively adding more cess/surcharge on top of GST.
 
From what I know it was the panel from NIPFP was the one which proposed 23-25%:
http://www.livemint.com/Politics/ny...anel-calls-for-standard-GST-rate-of-2325.html
but I could be wrong.

Later a 1% levy was asked for manufacturing states, which goes to the "losses" point made by the scroll article above. So its like if they give the cess to manufacturing states they are screwed because high taxes, if they don't then they are screwed because "manufacturing states are making a loss".

I think what we forget is we are essentially a socialist country, tons of schemes like FSB, MGNREGA etc and essentially these services require money. Government is going to squeeze someone for the money they need to run these services, even with the apparent corruption.
 

Kilroyquasar

4 seconds, inhale; 4 seconds, exhale.
Skilled
@sharktale1212 - till recently some state FinMins had asked for rates of 22-24%. though it seems most likely its going to hover around 20% (which could/should reduce with time). the article makes sense regards a moderate rate. countries which reduced their GST rates have had registered substantial jump in revenue with it.
 
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