Game-Changer GST says Prime Minister Narendra Modi.
Game-Changer GST Will revive manufacturing, Boost foreign investment India. India to be the world’s fastest growing major economy. GST will boost economy of under developed States.
Companies will make ‘incredible’ earnings post GST, says Mark Mobius. Talking about the health of the Indian economy, Mobius asserted that the country’s growth is “tremendous” and it would continue to grow fast in the coming years.
Game-Changer GST is a significant reform
Indian government is serious about reforms and that gives confidence to investors. GST is a significant reform that will allow India to form one common market. GST is expected to lower the cost of doing business in India.
Under GST, the majority of the current indirect taxes would be subsumed into a single comprehensive tax on supply of goods and services. GST is expected to not only have an impact on Companies’ taxes, but also their entire business. It will affect pricing, working capital, supply chain, vendors and customers contracts, ERP systems and internal control across sectors. It will be imperative for companies operating in India to assess their own preparedness for the introduction of GST.
Game-Changer GST India takes the first steps
Moving away from the ‘one market, one rate’ tax model, the Goods and Services Tax Council decided on standard rates of 12 percent and 18 percent and three more rates of zero, 5 percent and 28 percent for the tax’s implementation.
Finance Minister Arun Jaitley said a zero tax rate would apply to 50 percent of items in the retail inflation basket to protect consumers from price rises on goods such as food grains. For some items such as Tobacco products will continue to be taxed at 65 percent, he said, adding luxury goods will also be taxed at a higher rate.
Ideal single tax rate system is a long way off. In a politically diverse country like India a multiple-rate GST was the only way to proceed.
“Excluding half of the items in the CPI calculation will protect the spending power of lower income households, which tend to have a higher propensity to consume disposable income than wealthier groups,” said Tamara Henderson, an economist with Bloomberg Intelligence.
Game-Changer GST objectives:-
1. Ensuring availability of input credit across the value chain
2. Minimising cascading effect of taxation
3. Simplification of tax administration and compliance
4. Harmonisation of tax base, laws, and administration procedures across the country
5. Minimising tax rate slabs to avoid classification issues
6. Prevention of unhealthy competition among states
7. Increasing the tax base and raising compliance