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GST gets its way with no more roadblocks, passed unanimously

GST gets its way with no more roadblocks, passed unanimously
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Almost a decade old debate, came to an end when the Rajya Sabha passed the GST bill last day. The Constitution (122nd Amendment) Bill, 2014 was approved by the Rajya Sabha with 203 votes, all in favor.

The bill, which was first proposed in 2006, was stuck as the erstwhile United Progressive Alliance (UPA) and the National Democratic Alliance (NDA) failed to reach a consensus on the Bill for the last 10 years.

GST Bill or the Goods and Services Tax Bill officially known as The Constitution Bill, 2014, proposes a national value added tax to be implemented in the nation. The bill, turning in to law will eliminate the multiple category taxes imposed on goods and services, i.e. Sales Tax/ VAT and the Service tax. GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.

The bill is going to benefit the whole economic cycle that includes Business and Industry, State and Central Government, and the consumer in multiple ways. Removal of cascading effect of taxes, uniform taxation, easy administration by the government, and relief in the overall tax burden, being some of the key benefits.

Keeping in mind the federal structure of India, there will be two components of GST – Central GST (CGST) and State GST (SGST). Both Centre and States will simultaneously levy GST across the value chain. Tax will be levied on every supply of goods and services. Centre would levy and collect Central Goods and Services Tax (CGST), and States would levy and collect the State Goods and Services Tax (SGST) on all transactions within a State. The input tax credit of CGST would be available for discharging the CGST liability on the output at each stage. Similarly, the credit of SGST paid on inputs would be allowed for paying the SGST on output. No cross utilization of credit would be permitted.

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