Goods and Services Tax report finalized by PSC
Goods and Services Tax (GST) report was finalized by the Parliamentary Standing Committee (PSC) on Finance which will be tabled in Lok Sabha in August 2013 session. The GST Bill introduced in Parliament in 2010 is being examined by the Standing Committee on Finance. The states and the Centre now jointly would finalize the draft and bring it back to Parliament.
What is the issue over GST?
- The GST roll-out missed many deadlines due to differences between the states and the Centre over controversial issues of central sales tax, compensation to states and design of GST structure.
What are the suggestions about Goods and Services Tax (GST) from the panel of Parliamentary Standing Committee (PSC) on Finance?
- The panel has suggested that the government should look into the issue in case of higher resource mobilizing states bearing revenue loss due to implementation of GST regime.
- It also suggested that the Centre should prepare a framework for the GST regime in which the revenue generating states should be adequately compensated.
Goods and Service Tax is a tax on goods and services, which will be levied at each point of sale or provision of service, in which at the time of sale of goods or providing the services the seller or service provider can claim the input credit of tax which he has paid while purchasing the goods or procuring the service.
On most of the goods and services the rate of tax remains the same but as per the necessity of the nation some goods or services can be declared as “exempted” or “Zero rated”. The whole system is developed in such a way that it avoids the cascading effect and the final consumer bears the burden of all the tax.
Generally, in such a system Exports are zero rated and all the taxes paid while purchasing and manufacturing the goods including the taxes paid on raw material and services are returned to the exporter to make the exports competitive.
The sellers or service providers collect the tax from their customer, who may or may not be the ultimate customer, and before depositing the same to the exchequer, they deduct the tax they have already paid.
This is simply very similar to VAT which is at present applicable in most of the states and can be termed as National level VAT on Goods and Services with only one difference that in this system not only goods but also services are involved and the rate of tax on goods and services are generally the same.
Key advantages of GST
- It is proposed to bring in a common tax rule for goods and services by considering most indirect taxes.
- It will also help to increase the revenue collections.