MORE ABOUT GST

After 14 years of working on it, it was recommender by Dr. Kelkar Task force (Constituted in 2003) by Atal Bihari Vajpayee Government on 16-07-2004 who realized the need of implementation of Goods and Services Tax in INDIA for its growth and development. GST implemented in India on 1st July 2017.

Little History

  • The idea of National GST was first mooted in India by Kelkar force in 2003.
  • The first announcement for proposing GST was made in budget speed on 28-02-2006 by the finance minister of that time. But that date was not able to achieve due to political differences.
  • Various steps were taken to the introduction of GST. task of designing GST was given the power to state finance committee on 10 November 2009. The proposed GST law is broadly on lines as indicated in the discussion paper.
  • Constitution (122nd Amendment) Bill, 2014 was introduces in Loak Sabha. And on 03-08-2016 passed in Rajya Sabha.
  • Implementation of GST took place across India on 01-07-2017.

Pranab Mukherjee and Prime Minister Narendra Modi pressed buttons to launch of Goods and services tax at midnight.

The Prime Minister said that ONE TAX ONE NATION ONE MARKET would be greatly helpful to traders.   

There were various reasons for the implementation of goods and services tax instead of old system of multiple taxes.

The following major defects were in structure of indirect taxes, an existing unto 30-06-2017 –

  1. Central sales tax (CST) was payable @ 2% for every movement of goods from one state to another. Even in case of stock transfer or branch transfer.
  2. Cascading effect of taxes could not be avoided due to CST and entry tax. Central VAT was payable on central excise element also.
  3. Movement of goods in European Union (EU) is free across all countries without any incidence of tax. However, in India movement of goods and services from one state to other was not tax free.
  4. India did not have one national markets due to invisible barriers because of various taxes like sales tax, vat tax, state tax etc.
  5. Millions of man hours and truck hours were lost due to check post. Tough huge corruption is involved.
  6. Central government could not impose tax on more than manufacturing level.
  7. Some transaction was taxed by both central government and state government.
  8. Each state had their own VAT Laws. Thus, taxable person who  owns business in more than one state found it difficult to keep pace with tax laws of each state.

Few lines from PM Modi’s speech at the time of implementation of GST “Chanakya’s words summarize the whole GST process. Even if something is very difficult to be achieved, one can obtain it with penance and hard work. Can we imagine, when we became independent there were more than 500 Princely states. If it was not for Sardar Vallabh Bhai Patel to integrate these Princely states, what would have been the political map of India today? Just as Sardar Vallabh Bhai Patel unified India by helping several princely states subsume into a common entity, the GST will bring economic unification. If we take into consideration the 29 states, the 7 Union Territories, the 7 taxes of the Centre and the 8 taxes of the states, and several different taxes for different commodities, the number of taxes sum up to a figure of 500! Today all those taxes will be shred off to have ONE NATION, ONE TAX right from Ganganagar to Itanagar and from Leh to Lakshadweep.”  https://www.ndtv.com/india-news/full-text-of-pm-narendra-modis-speech-at-goods-and-services-tax-launch-from-parliament-1719236

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Published by Surbhi Shukla