#Finance
GST is arguably the most radical piece of tax reform which
could become the basis of new cooperative partnership
between center and state. The reason why GST is taking so
long to materialize is because states are fearful of losing their
fiscal autonomy in levying the local taxes which are
constitutionally in their domain. The center has proposed a
compensation which will be provided to the States for the
loss of revenue on account of implementation of GST for a
period which may extend to five years.
INM MAGAZINE VOLUME 8 | FEBRUARY 2016
three types of GST:
1.Central GST (CGST)
2.State GST (SGST)
3.Integrated GST (IGST)
The scope of IGST model is that the Center would levy
IGST, which would be CGST plus SGST on all inter-State
transactions of taxable goods and services. As all the
interstate dealers will be e-registered and correspondence
with them will be by e-mail, the compliance level will also
improve substantially.
According to Prof. Arvind Panagariya, Vice Chairman
NITI Aayog, GST will widen the tax base of the country and
reduce the current tax rates. He stated that every stage of
production will be given equal treatment with unified tax
rate.
As GST gets implemented, the consumption states will get
the revenue, not the manufacturing states, because GST is
said to be consumption based tax. This is the reason why
West Bengal is favoring GST and Gujarat is opposing its
implementation.
GST is said to be transaction tax, not income tax. GST
would be collected at the point of sale rather than
production. It will serve to unify India into a single market.
There would be no more need to erect border