Rajya Sabha nodded a yes for GST

GST or Goods and Service Tax bill has been finally passed by the Rajya Sabha unanimously after a long battle and a day long debate. The GST Bill's passage marks a key milestone in the long-delayed progress of the reform, which the Modi government wants to roll out by April 1 next year. The reform's rollout, however, will be a painstaking grind by the Centre and states.

But what is the tax all about and how can the same be defined in easy terms?

GST is one indirect tax for the whole nation, which will make India one unified common market. 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.

GST aims to free the consumers from the long tangle of taxes and are solely indirect and includes sales tax, excise and VAT. The idea of GST pronounces an unified system that is ready to bind the nation into one unified market under the economic system, freeing the consumers from all this long list of taxes.

The Empowered Committee of State Finance Ministers, which deliberated on the tax and its implications, has recommended what all taxes are to be subsumed in the GST:

In the Central taxes: 1) Central Excise Duty; 2) Additional Excise Duties; 3) The Excise Duty levied under the Medicinal and Toiletries Preparation Act Service Tax; 4) Additional Customs Duty, commonly known as Countervailing Duty (CVD); 5) Special Additional Duty of Customs - 4% (SAD); 6) Surcharges, and 7) Cesses.

Among the state taxes and levies: 1) VAT / Sales tax; 2) Entertainment tax (unless it is levied by the local bodies); 3) Luxury tax; 4) Taxes on lottery, betting and gambling; 5) State Cesses and Surcharges in so far as they relate to supply of goods and services; and 6) Entry tax not in lieu of Octroi.

In other words, under the current economic system, there is the cascading effect or double taxation - the consumer pays tax on tax already paid by the manufacturer which is embedded in the prices. Thus at every step when tax gets added on tax by the time the final product reaches the consumer, he is made to pay higher in every which way. With GST, this anomaly will be corrected, thus bringing down the end price.

But GST and its direct connect with the Lingerie and Intimate apparel industry will only be a future derivation when finally the tax gets implemented on the ground level and becomes operational with its norms as a reality. 

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