Victor Hugo once said, “No power on earth can stop an idea whose time has come”. The introduction of the Goods and Services Tax (GST) is one such idea, a key fiscal reform, eagerly awaited by India Inc.
GST would be one of the most significant fiscal reforms of independent India. Central taxes like, Central Excise duty, Additional Excise duty, Service tax, Additional Custom duty and Special Additional duty and State level taxes like, VAT or sales tax, Central Sales tax, Entertainment tax, Entry tax, Purchase tax, Luxury tax and Octroi will subsume in GST. Taxable goods and services will not be distinguished from one another and would be taxed at a single rate in a supply chain till the goods or services reach the customer. Exports would be zero-rated and imports would be levied on the same taxes as domestic goods and services adhering to the destination principle. GST has a wider tax base which is simpler to administer and also economically attractive.
Given India’s consistent poor ranking in the ease of doing business for the past few years, the introduction of GST, which is expected to put in place a state-of-the-art indirect tax system, will help improve the global image of Indian taxation.
The government is committed to introduce GST by 1 April, 2016. It might bring a paradigm shift in the operation of tax laws in the country. Meanwhile, companies need to gear up to absorb the change in processes and practices with the introduction of GST. Efforts will be required by the industry not only on the technical know-how but also on the change in IT capabilities to handle this new tax reform effectively, contribute to its smooth roll out and, most importantly, gain a real competitive advantage.
Not understating the obstacles that lie in the path to a successful implementation of GST, it is time the country should rise above politics and embark upon the journey, moving together in one direction on the road which leads to a better India. As is well known, difficult roads often lead to beautiful destinations.
Author
Ketna Kanodia
Ketna Kanodia is a senior article trainee at K. Vijayaraghavan & Associates. Graduated from Osmania University, she is currently pursuing Chartered Accountancy. A passionate learner, she has gained significant exposure to the corporate environment of various industries.
