Goods and Services Tax (GST), the biggest fiscal reform India has seen since Independence, was formally launched by Prime Minister Narendra Modi,and President Mukherjee on Saturday.
The midnight launch of the Goods and Services Tax (GST), the country’s biggest tax reform since independence, has catapulted India into a select league of nations with a national sales tax.
Most central ministers, federal lawmakers, senior judges, government officials and some eminent people from other walks of life attended the function. Ratan Tata, patriarch of India’s largest business group, was also present.
The launch event, being hailed as India’s second tryst with destiny after Independence on August 15, 1947, saw speeches from Finance Minister Arun Jaitley,Prime Minister Narendra Modi,and President Pranab Mukherjee.
Speaking at the launch ceremony at the Central Hall in Parliament, President Mukherjee said, “It is remarkable that 18 meetings held so far, all decisions have been taken by consensus in the council. GST is a tribute to the maturity and wisdom of India’s democracy,” he said.
The President also added that the tax reform will act as a major boost to economic efficiency, tax compliance and domestic and foreign investment. Prime Minister Narendra Modi expressed deep satisfaction at the launch when he said, “GST is a good and simple tax regime that will eliminate the compounding effects of multi-layered tax system”.
Finance Minister Arun Jaitley kicked off the proceedings, delivering a short address in which he called GST an “important achievement for the entire country.” “The old India was economically fragmented, the new India will create one tax, one market and for one nation,” Jaitley said.
PM Narendra Modi, in the historic Parliament address, termed GST as good and simple tax for the nation. The Prime Minister said that scope of GST is unlimited to the financial system, adding, that India will now move in a new direction.
The goods and services tax (GST), a radical step towards the country’s transformation into a common market, became a reality at the stroke of midnight with Prime Minister Narendra Modi billing it a “good and simple tax” which would help businesspersons by putting an end to tax terrorism and inspector raj. It would also contribute to the welfare of people and the fight against corruption and black money, he added.
Modi said GST was not just about taxation reform. “It is about cooperative federalism, it will help fight black money and corruption and usher in a new culture of governance, giving an opportunity to honesty. It brings in a new culture of governance,” he said, adding that it would help “find resources to help the poor without disproportionately burdening anybody” — a pitch reminiscent of the hardsell of demonetisation.
The GST is a Value added Tax (VAT) is proposed to be a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level. It will replace all indirect taxes levied on goods and services by the Indian Central and state governments.
GST is a consumption based tax/levy. It is based on the “Destination principle.” GST is applied on goods and services at the place where final/actual consumption happens. GST is collected on value-added goods and services at each stage of sale or purchase in the supply chain.
Goods and Services Tax (GST) is an upcoming system of taxation which will merge many individually applied taxes into a single tax. GST is a comprehensive indirect tax on manufacture, sale and consumption of goods and services throughout India to replace taxes levied by the central and state governments.
The new tax regime replaces 17 different Central and state taxes and 23 cesses, including service tax, value added tax, entry tax, excise duty among others. The GST is expected to remove the cascading effect of tax-on-tax and make it easier to do business in the country. After GST, goods will have uniform prices across the country.
Most of the goods and services have been listed under the four broad tax slabs – 5 per cent, 12 per cent, 18 per cent and 28 per cent. Some items like gold and rough diamonds have exclusive tax rates while some have been exempted from taxation.
Acknowledging that the criticism that GST would put India into disarray wasn’t entirely misplaced, the government admitted that there would be teething problems. Speaking at India Today’s Tryst With Tax Conclave on Friday, Finance Minister Arun Jaitley and Information and Broadcasting Minister Venkaiah Naidu both accepted there are glitches with GST, but asserted that the issues will be fixed.
GST is expected to check tax evasion and broaden tax base. In the new regime, all filings will be done only through electronic mode to ensure non-intrusive administration. This will minimise taxpayers’ physical interaction with the tax officials.
The one national GST the country’s $2-trillion economy and 1.3 billion people into a common market, an exercise that took many long years.
In fact, the President sought to allay concerns about likely disruption. “GST is a disruptive change. It is similar to the introduction of VAT when there was initial resistance. When a change of this magnitude is undertaken, however positive it may be, there are bound to be some teething troubles and difficulties in the initial stages. We will have to solve these with understanding and speed to ensure that it does not impact the growth momentum of the economy,” Mukherjee added.
Speaking earlier, Jaitley also struck a non-partisan note as he generously apportioned the credit among parties, governments and former chairmen of the empowered committee of state finance ministers. He hailed the reform and said it would help the country “write a new destiny”.
But the PM did not let the grandeur of the occasion distract him from potential problems. He reached out to small businesses which are wary of the new regime, and said grievances, if any, would be redressed.