Towards GST Regime In India

The Lok Sabha has passed the Constitution (122nd Amendment) Bill,2014 on 6th May,2015 that seeks to bring in the Goods and Services Tax(GST), with the Hon’ble Finance Minister assuring the States that the Centre would compensate any revenue losses suffered by them over the next five years. GST is a domestic trade tax that will be levied in the form of a value added tax on all goods and services -in practice with some exemptions. It marks the transition from an existing origin-based taxation regime to a destination-based taxation regime. The introduction of GST is expected to remove the cascading effect of taxes by moving to a common tax base and subsuming various state and central taxes into Central Goods and Service Tax (CGST) and State Goods and Service Tax (SGST). The Empowered Committee describes the GST as “a further significant improvement –the next logical step - towards a comprehensive indirect tax reforms in the country.” A common tax structure for goods and services in India is necessary for improving supply chain efficiencies and rationalizing business objectives. The only question that needs to be answered is when this will become a reality. Whenever it happens, it will come with a set of challenges that if addressed at the right time can take the economy to new heights.