GST is considered to be one of the biggest tax reforms in Independent India. For quite some time, the GST bill had been waiting for approval in the parliament and finally it has been approved by both the houses. This makes it possible for the implementation of GST throughout India shortly.
To understand GST well, we have to consider the different taxes being currently levied by the central and the state government on goods sold and the services rendered. At present we have central excise tax, Value Added Tax, Sales Tax, Octrai etc on the goods sold. This makes it difficult for the traders in the movement of goods. It also results in time loss as the trucks carrying goods have to line up at the different nakas for paying the required tax. Another disadvantage is the corruption that takes place at these stop points. The people working there demand their own share before letting the vehicles pass. So, the current tax regime is going to replace all such intermediaries. There will be flat GST levied on the goods and services by the State and the Central government separately. While giving approval for the new tax structure, there were some resistance and apprehensions of the a few states as they predicted certain revenue loss once GST comes into force. The central government has allayed such fears and promised the compensation to the states in case of any financial loss.
The streamlining of tax is good for the manufacturers as well as consumers of the goods. On the bill, now consumers can expect a single GST instead of multiple taxes. It is a welcome step in the right direction. However, it remains to be seen how effectively the new tax is implemented to achieve its objectives.