Introduction: nation. The core principle of GST thus

Introduction:

Goods
and Service Tax (GST) as the name suggests is a tax levied when a consumer buys
a good or service. It is meant to be a single, comprehensive tax that will
subsume all the other smaller indirect taxes on consumption like service tax,
VAT etc. Before GST, apart from the central excise duty or service tax, there
were indirect taxes levied at multiple points on every product or service be it
VAT/sales tax, Octroi, Luxury Tax etc. which all added up to cut the consumers
pocket. After GST, all the aforementioned indirect taxes have been subsumed
under a single tax.  The GST is the
country’s largest tax reform in the 70 years of independence and it will help
modernize Asia’s third largest economy worth US$ 2 trillion with 1.3 billion
people into a single market by bringing in a uniform indirect tax system
Chandran N., CNBC.com, Dec 2017. It was introduced as the Constitution (One
Hundred and First Amendment) Act, 2016.

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The
concept of GST was originally devised in France way back in 1954 and at present
it is being followed by 161 countries in the world. India became the 162nd
country in this list. There are basically two systems of GST viz., unified GST
and dual GST. India being a quasi-federal country has adopted the dual
structure of GST where tax is imposed by both the union and the states.
Therefore, we have three forms of GST in India- the Central GST, the State GST
and the Integrated GST.

 Body:

            All kinds of taxes in India are
imposed by the Union and the state governments. The constitution provides that
“no tax shall be levied or collected except by authority of law” (Article 265
of the Constitution). Hence, the GST had to be introduced as the Constitution
(One Hundred and First Amendment) Act, 2016. The main idea behind introduction
of GST was to make India a single common market by bringing in one single
indirect tax which was to be imposed uniformly all over the nation. The core
principle of GST thus is “One Nation One Tax One Market” Teltumbde A., Margin
Speak, Vol. 52, Issue No. 27, Jul 2017.

            The expectations of each and every
stakeholder be it the government, taxmen, economists, industry and the common
men are many. The government believes that the former system of indirect
taxation had a cascading effect and the introduction of GST has rationalized
it. The taxmen believes that many areas of services which were earlier untaxed
have now been covered after the introduction of GST thereby expanding the base
of taxation. The economists believes that GST has enabled much more than simply
redistributing the tax burden from one sector or group in the economy to
another. The industry pressure groups believes that GST brings uniformity of
taxes pan India regardless of place of manufacture or distribution thereby
providing greater certainty and transparency of taxes. The common man believes
that GST has made India a common national market by providing an unbiased tax
structure which is business neutral irrespective of the geographical locations.
If the GST is implemented properly, it has got many takeaways for all the
stakeholders.

            The challenges while implementing
GST are also diverse. GST follows a fully online procedure. Beginning from the
registration of the assesses to filing of returns and the payment of taxes, one
has to be in touch with the online GST portal. The small and medium sized
businesses will have to gradually adapt to this change by equipping themselves
with the required technical support and trained manpower. Even though it aimed
for simplification of tax structure but the presence of multiple slab rates
makes it cumbersome while practical implementation. The regulatory compliance
for the Corporate Sector is going to be a hectic one. They have to file 37
returns (3 returns per month plus one annual return) and that is just for one
single state. The organizations having network of branches across different
states of India will have to file multiple returns in state specific manner.
The IT infrastructure, MIS, Accounting and ERP Software needs to be updated to
incorporate GST in them and the major challenge would be to tactfully and
carefully deal with bugs, technological issues pertaining to temporary server
problems, blackouts etc. in the GST portal while logging in.         

            The need for GST came out of the
necessity of making India a One Market Economy. The Constitution of India
states that, “India i.e., Bharat is a Union of States” Article 1(1). The
Union is strong only if both the Centre and States are strong. Here comes the
concept of Cooperative Federalism. The Indian concept of dual GST is also based
on this principle of Cooperative Federalism which is justified by the
Constitution of India itself MyGovTeam, Blog.MyGov.in, Jul 2017.  Government of India’s present Chief economic
Advisor Mr. Arvind Subramanian once stated that despite being a single country,
it’s not a single market. There were too many taxes such as Central Sales Tax
on inter-state sale of goods and services and numerous intra-state levies such
as VAT, Octroi etc. which ended up in raising the price of the goods. The end
consumer thus ended up in paying higher prices since the sellers could not get
Input Tax Credit (ITC) on all the taxes paid by them. This problem of cascading
effect of taxes has been addressed by GST. The uniformity of tax rates across
the country with a system of seamless ITC have lead to a reduction in the costs
of production and thus the consumer is being ultimately benefited. Not only
this but also it has lead to an increase in the competitiveness of the Indian
exporters in the global market thereby positively impacting the Make in India
mission of the Honorable Prime Minister of India Mr. Narendra Modi. In the
words of present Finance Minister of India Mr. Arun Jaitley, “Old India was
economically fragmented. New India will create One Tax, One Market, and One Nation.
It will be an India where Centre and states work together towards the common
goal of shared prosperity” preliminary text of Finance Minister, Mr. Arun
Jaitley’s address at the launch of Goods and Service Tax from Central Hall of
Parliament, Parliament of India Archives, Jul 2017.

Conclusion:

            The major impact of GST is that it
has turned India into a One Market Economy. The cascading effect of indirect
taxes have been removed to a great extent but still certain commodities like
Petroleum and Alcoholic beverages have been kept out of it. This directly means
that the cost of transportation is impacting the price of the goods because the
ITC is not available in case of fuel expenses. The boost that it gives to the
Make in India mission means that the foreign investors will be attracted to
invest in India. Moreover, the GST will be applied on imports; domestic
manufacturers on the other hand will be encouraged to export their products
overseas. The prices of goods will be reduced which means that better goods and
services  will be within the reach of a
large number of the population and as such increase the standard of living of
the people. By all these things, the government is trying to create an
atmosphere for strengthening the manufacturing sector in India.

            All the sectors of the economy be it
the small, medium, large, intermediaries, importers, exporters, traders,
professionals and consumers shall be directly affected. The GST is going to
integrate the economies of all the states of India and thereby make the Indian
economy a single, unified and a strong one. The tax barriers between the states
are going to be broken and the taxation burden between the manufacturing and
consuming states is going to be equitably distributed.

            To sum up, the idea of One India,
Strong India given by the first Home Minister cum Deputy Prime Minister of
India, Sardar Vallavbhai Patel is going to be fulfilled in the true sense
through GST which is going to be a pan India tax i.e., “One Nation One Tax One
Market”.