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The
GST, however, is a comprehensive form of tax based
on a uniform rate of tax for both goods and
services. However, the GST is payable only at the
final point of consumption.
How
will it work in India?
The
GST was first mentioned in India during the
2006-2007 budget and the latest budget too includes
the need to take steps to make the implementation
possible by April 1, 2010. Given the federal nature
of the country, GST in India is expected to take the
form of a dual GST including both a Central and a
state GST.
The Empowered Committee of the State Finance
Ministers has been given the responsibility for
creating a model and a roadmap for the GST. While
there is very little clarity at present, it is
expected that the central GST will subsume excise
duty and service tax and the state GST may replace
the VAT.
What
are the benefits of the GST?
At
the simplest level, the GST reduces the number of
instances where taxes need to be paid thus reducing
the possibility of manipulation on the part of tax
authorities and is hence assumed to be a much
transparent mode of administering taxes. It will
alleviate the burden of cascading taxes for
individuals. It is also expected to boost revenue
collection in certain states and to reduce the
prices of goods.
What
are the difficulties involved?
The
fundamental problem involved is the decision of a
revenue-neutral rate for the GST that will be
acceptable to all those involved and also whether
there will be a single rate or two rates at state
and Central level. The federal nature of the country
also accounts for its own share of complications and
delays. For the Centre to be able to impose tax at
the retail level and for states to be able to tax
services will require constitutional amendments,
which will further need to be passed by the
Parliament and state legislatures.
Source :
Economic Times - Gurgaon, Haryana, India,
dated 12/07/2009
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