5 Reasons Why the GST Bill Matters

Image Source: NDTV.com

Reason 1: PROUD TO BE INDIAN MOMENT

At 9 PM last Wednesday when the Rajya Sabha passed the GST Bill. While every party did some grandstanding during the debate, at voting time everyone voted in favor. Politicos working at 9PM and doing good for the country! This Bill has been in the works for TEN years now. 

Reason 2: EASE COMPLIANCE, REDUCE CORRUPTION

GST consolidates 20+ taxes, substantially increasing ease of compliance and reduction of corruption. A sampling of the taxes that will go away - Central Excise Duty, Additional Excise Duties, Medicinal and Toilet Preparations Excise Duties, Service Tax, CVD, State Value Added Tax/Sales Tax, Entertainment Tax, Central Sales Tax, Octroi, 

Reason 3: REDUCES INEQUALITY 

When a TV made in a factory in Goa is sold in Bihar, the Bihari customer pays a price that includes the tax the Goa factory paid the Goa govt. In effect, in the current tax model, the Goa govt taxes a Bihari customer. With GST, taxes paid by Biharis will go to the Bihar govt. Since the Bihar govt spends its money on Biharis and not on Goans, this will substantially reduce the inequality of development we see across states of India. 

Reason 4: EVERYBODY WILL PAY, EQUITABLY

With GST, all supply of goods or services is taxable. So the service tax exception lists will go away. And the difference in tax levels of goods versus services will go away (one of the reasons why India has not been able to develop a strong manufacturing base). This reduces the possibilities of tax avoidance. It will ensure that everyone pays tax equitably. Only alcohol for human consumption is excluded from GST (because states intend to tax it higher than at GST levels). 

Reason 5: INTEGRATION OF THE COUNTRY

With GST, it will be much easier for people living anywhere to buy goods and services from anywhere else in India. Today it is a massive challenge for most manufacturers to sell their products across the country owing to each state having its own tax rules leading to all kinds of harassment. As Sachin Bansal of Flipkart said in an earlier TOI article, Sardar Patel's efforts integrated India politically. GST can integrate India economically. 

Yes. Of course. Manipal ProLearn is launching a course on GST soon.