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The introduction of Goods and Services Tax (GST) would be a very significant step in the

field of indirect tax reforms in India. By amalgamating a large number of Central and State
taxes into a single tax, it would mitigate cascading or double taxation in a major way and
pave the way for a common national market. From the consumer point of view, the biggest
advantage would be in terms of a reduction in the overall tax burden on goods, which is
currently estimated at 25%-30%. Introduction of GST would also make Indian products
competitive in the domestic and international markets. Studies show that this would
instantly spur economic growth. Last but not the least, this tax, because of its transparent
character, would be easier to administer.
In 2000, the Vajpayee government set up the Empowered Committee of State Finance Ministers with the
aim of facilitating a switch from the existing national-level central excise duty and state-level sales tax
model to a value added tax (VAT) model. [10] It was given the task of designing the GST model and
overseeing the IT back-end preparedness for its rollout. The committee was headed by Asim
Dasgupta, Minister for Finance and Excise of West Bengal.
Dr. APJ Abdul Kalam pointed out that although the indirect tax policy in India has been steadily
progressing in the direction of the value added tax (VAT) principle since 1986, the existing system of
taxation of goods and services still suffered from many problems and had suggested a comprehensive
goods and services tax (GST) based on the VAT principle. GST system is targeted to be a simple,
transparent and efficient system of indirect taxation as has been adopted by over 130 countries around
the world. This involves taxation of goods and services in an integrated manner as the blurring of line
of demarcation between goods and services has made separate taxation of goods and services
untenable.

GST could soon be a reality owing to the open support of a majority in the 243member Rajya Sabha. PM Modi is determined to build a consensus over the
passage of the GST bill in the current monsoon session of the Parliament and
wants to leave no stone unturned to bring the reform.
There are a plethora of indirect taxes at the Central and state levy on the
consumption of goods and services within India. In comparison, direct taxes are
levied on a person’s income – for instance, the Income Tax.
Excise and duty tax are two biggest indirect taxes at the Central level that will be
replaced by the GST. At the state level, some of the biggest indirect taxes that will
be replaced by the GST include sales tax as well as entry tax and octroi – both of
which are levied on certain goods entering a city – to name a few. However, taxes
on petroleum, tobacco, and some other categories of products will be kept out of
the GST.
Replacing this bevy of taxes by the GST will simplify the overall taxation regime.
However, it could also result in a loss of revenue to the Centre and many states.

Second.Therefore. . more than half of the 29 states in India). These issues have taken a long time to sort out and finally. Finally.” What lies ahead But there are still some hurdles that the GST Bill will have to clear. In the 2006 Union Budget during the Congress-led United Progressive Alliance rule. There have been disagreements on contentious issues such as whether or not to include items such as petroleum and tobacco that are large revenueearners for states and how to compensate for losses incurred by states by bringing so many taxes under one umbrella. The President will then approve the GST Bill for enactment.5%. the Lok Sabha passed the GST Bill. Fourth. As its name suggests. the Bill is expected to be passed soon. in May 2015. However. the GST Council will recommend the rules and structure for implementation. First. Dr Arvind Subramanian. then Finance Minister P Chidambaram had proposed the introduction of this tax from April 1. tasked with deciding rates of taxation under GST. 60 days after the Bill is enacted. But when that does happen. A big move forward This means that there is at least a year to go before the GST is implemented. it has the potential to bring meaningful changes to the taxation regime in India. The journey from then to the GST Bill in the Lok Sabha last year has indeed been long. had recommended a revenue neutral rate of 15-15. the final decision on the rate (or a range of rates) will be taken by a body called the GST Council. Adjournments and disruptions of Parliament sessions will only delay this. It is now pending in the Rajya Sabha and. The history of the GST in India goes back more than 10 years. which will have representatives from the Centre and states. 2010. it will need to be passed by the Rajya Sabha with a two-thirds majority. the panel headed by Chief Economic Adviser. Even Prime Minister Narendra Modi recently said: “I do not think any political party will try to commit suicide by opposing GST. assuming the Bill makes it through the Rajya Sabha. the GST Council (consisting of representatives from the Centre and States) will be formed. this is the rate which preserves revenue at current levels. it will to have to be ratified by the legislative assemblies of at least 15 states (that is. given that the BJP is making a renewed effort to reach out to opposition parties to bring about a consensus on contentious issues. This step could take some time considering the many categories of goods under indirect taxes that will have to be migrated to a new rate of tax under the GST.

Consumers will benefit from a more transparent system of taxation. Since the proposal involved reform/ restructuring of not only indirect taxes levied by the Centre but also the States. A dual GST module for the country has been proposed by the EC. 2009 with the objective of generating a debate and obtaining inputs from all stakeholders. This was further trifurcated into three SubWorking Groups to work separately on draft legislations required for GST. State VAT. while manufacturers will benefit from easier payment and administration of their taxes. betting and gambling and entry tax (not levied by local bodies) would be subsumed within GST. additional excise duty. a Joint Working Group consisting of officers from Central as well as State Government was constituted. titled "A Model and Roadmap for Goods and Services Tax (GST) in India" containing broad recommendations about the structure and design of GST. Based on inputs from GoI and States. entertainment tax. the Department of Revenue made some suggestions to be incorporated in the design and structure of proposed GST. In addition. Under this model GST have two components viz. A proposal to introduce a national-level Goods and Services Tax (GST) by April 1.While the introduction of the Service Tax in 1994 bought a vast number of untaxed services within the tax administration. 2010 was first mooted in the Budget Speech for the financial year 2006-07. Obviously. In April. the responsibility of preparing a Design and Road Map for the implementation of GST was assigned to the Empowered Committee of State Finance Ministers (EC). and maybe not even in a year. But then. structural reforms take time and their benefits will also be seen only over the longer term. taxes on tteries. Central Excise duty. In doing away with the myriad and complicated indirect taxes between state and Centre. In order to take the GST related work further. the Central GST to be levied and collected by the Centre and the State GST to be levied and collected by the respective States. the GST is likely to simplify the overall taxation regime. . process/forms to be followed in GST regime and IT infrastructure development needed for smooth functioning of proposed GST. In response to the report. and additional duty of customs (equivalent to excise). the EC submitted a report. The EC released its First Discussion Paper on Goods and Services Tax in India on the 10th of November. 2008. This dual GST model has been accepted by centre. Service Tax. an Empowered Group for development of IT Systems required for Goods and Services Tax regime has been set up under the chairmanship of Dr. none of this will happen overnight. it is now time for India to move to a unified regime of indirect taxes. Nandan Nilekani.