iNM Volume 8 | Page 12

#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