The GST Bill has been in the works since 2007 but it was shelved after objections from the public. It is called value added tax (VAT) in some countries. The GST will create a crucial new revenue source for the Government. To many of us, however, the GST promises higher prices for goods and services. The Government took the first step in its promise not to burden the people by exempting a few basic essentials from the tax. To further prepare for GST, we need to understand the tax and how it works. Here is some essential information on the impending tax regime. How will GST affect consumers?
Utility bills and food may become cheaper while certain goods like computers and clothing may cost more with GST. The fear that GST might have a cascading effect on goods and services may come to nought as the input tax credit mechanism will allow industries along the supply or production chain to claim credit or get refunds on whatever GST is imposed. Although the Government has no immediate plans to lower the income tax or corporate tax, the GST 4% rate is said to be too small to create a multiple taxation burden on the individual. Will GST raise prices or shoot up the inflation rate?
After the implementation of GST, there might be a one-off increase in prices - especially for goods that are currently not taxed - but not for those that are. The good news is that IMF studies show that GST does not lead to a continuous spiralling of prices. How different is GST from income tax?
GST is considered a fairer and more equitable system of tax for individuals compared to income tax. As it is a consumption-based tax, the amount one pays will depend on the individual’s consumption - the higher you consume, the more taxes you pay. At the same time, it minimises tax evasion and ensures a broader revenue stream for the country. How different is GST from SST?
GST involves the whole supply chain, unlike the SST (sales and service tax) system, which is imposed only at one stage. With a...
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