Finalisation of rates for most goods and services by the GST Council has cleared the way for implementing the one-tax regime from July 1. While the Council decided which goods and services would fall in the various slabs of GST rates of 0%, 5%, 12%, 18% and 28%, the standard rate for services has been kept at 18%, with some services being taxed at 28%.
Not really, since most items in the CPI basket are likely to be taxed at a lower rate under the GST. Education and healthcare, which form over 10% of the CPI basket, are to be exempt from the levy of GST. Moreover, the availability of input tax credit will surely soften the impact of the GST on services inflation.
However, there are concerns that the pending decisions regarding area-based exemptions and exports promotion schemes could impact output prices for some companies and exporters. Similarly, concerns had also been raised that the transition to GST may disrupt the working capital cycle of businesses in the initial phase.
If GST is successful in its intended effect of increasing tax compliance, the tax burden would surely increase, and it may, in turn, force companies to pass the cost of higher tax compliance on to the consumer at a later stage. Such impact on underlying inflationary pressures is likely to be fleeting. As the overall tax structure remains complex with the multiplicity of slabs for goods and services, it is important for the government to spread the awareness and educate people on the ground before the new tax regime is rolled out.
GST is expected to boost the Indian economy in a similar way that liberalization had done 26 years back. “No power on earth can stop an idea whose time has come,” Manmohan Singh had quoted Victor Hugo while presenting the Union Budget on 24th July 1991.
It would not be an exaggeration to say that future generations may look back at GST law as a watershed moment for India, which propelled her to newer heights of growth and development.
However, like all other sectors, e-commerce will undergo a lot of changes. Under the existing laws, the e-commerce industry has to deal with the levy of multiple taxes. Since, Products are shipped to throughout the country, each of the states imposes its own set of rules and taxes on products. There is also lack of clarity of tax treatment of various types of e-commerce transactions and new aspects like e-wallet and cash-back.
More clarity on Sale vs Service
In the present tax system, e-commerce and service companies face the necessity to compute taxes in both product and sales category which makes it highly confusing and complex. But after GST is put into force, there will not be any differentiation between business offerings and GST will not have separate computation for sale and service. Tax calculation will be done on total bill amount making the entire process simpler to comprehend.
When Most of Healthcare services were exempted from GST … The medical device industry expects the tax load in the (GST) regime to increase, which will result in a higher cost burden on patients, an official said on Wednesday.
He said at the existing indirect tax regime, the embedded tax rate approximately comes to 7.5 per cent and 10.7 per cent after considering countervailing duty, central sales tax, value added tax (VAT), Octroi, entry tax etc. Prices for most Life saving medical devices not to be impacted under the new scheme. But diagnostics equipment at 18% on steeper side and undesirable . Addressing the Grey Area – Government needs to bring clarity on how cost/price benefits, if any. will be passed on to the consumers?
Countervailing duty is levied at the first point that is at the import price while central sales tax is imposed on the billing price from the company to the distributor. VAT is levied at the value at which the goods are finally sold to customers. The government needs to urgently bring clarity on this point.it was earlier expected that the tax burden would ease with the introduction of GST as the uniform indirect tax regime would subsume all the taxe