A big economic policy reform news coming out of India. This is about the Goods and Services Tax (GST) bill, which has been pending for many years, it has been passed in the ongoing session of Parliament. The bill, which aims to simplify the indirect tax regime, will be a ‘game changer’ for the country and its implementation will be a big positive for long-term growth.
GST is a tax on goods and services with comprehensive and continuous chain of setoff benefits from the producer’s point and service provider’s point up to the retailer’s level. It is tax only on value addition at each stage, and a supplier at each stage is permitted to set off through a tax credit mechanism, the GST paid on the purchase of goods & services as available for setoff on the GST to be paid on the supply of goods & services. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with setoff benefits at all the previous stages. GST is one of the widely accepted indirect taxation system & prevalent in more than 150 countries across the globe.
The proposed GST law is the most important reform towards creating a single market in India. It can help to boost the India’s GDP growth by 1 to 2 percent as this will help faster and cheaper movement of goods across the country with a uniform taxation structure. GST successful implementation would give a strong signal to the foreign investors about our ability to support business, besides it will enable wide-scale changes in the tax structure which will have long term positive effects on India’s economy.
Enjoy reading about the big change.