The Goods and Services Tax (GST) Bill was passed in the Lok Sabha a few days back. It is expected that GST – the biggest tax reform ever in India – is expected to come into effect very soon. Experts are saying that this tax reform would bring down the cost of business transaction by creating a single market around the country and that too in a seamless manner. It is also expected that GST will provide the fillip that India needs so badly for its economy to grow and justify all the expectations that surround it. It is also being said that as a result of GST the gross domestic product (GDP) of India would increase by 2% as well.
How will the common man fare?
No matter how important this legislation is, it is going to have some bad effect on common people in the interim. It is expected that more services will become costlier. At the same time, a jumble for goods is expected as well. In the long term, however, GST is expected to have a good effect on most sectors that make up the Indian economy. Its short-term impact, however, is expected to be limited. This is expected in case of most economic reforms anyway.
Inflationary impact
As has been seen with the experience of most other countries that have implemented GST, there could be some inflation when the transition phase is on. With time, however, it should subside even as people grow more accustomed to the rule and measures such as anti profiteering come into being. It is expected that for the time being things such as mobile bills, renewing premium of life insurance plans, and investment management and banking services can become costlier than before. The same can also be said of basic luxuries such as Wireless Fidelity (Wi-Fi), booking tickets online, and direct to your home (DTH) services.
State-level implementation
As per Hasmukh Adhia, the Revenue Secretary, 14 states in India are taking steps to implement their own goods and services tax known as State Goods and Services Tax (SGST). This entire sequence is expected to be completed by the middle of May. As and when this is done it can be expected that the GST regime will come into being from July onwards. The law in question has already been approved by Telangana and Bihar. Rajasthan is expected to follow suit soon.
What is the government saying?
As opposed to what economic experts may be saying, Adhia feels that this would not have any inflationary effect on prices of goods and services used by common people around India. He says that the previous system – where states had their own tax system – had a cascading effect on the entire structure. According to the Revenue Secretary, under GST such a scenario would not be there. In fact, it could help in easing inflation if anything. He feels that under the new system prices of most goods would be lower than before. In case of the services though, he expects prices to remain the same.
Read More
What is GST: How will it change India
Impact of GST Bill on Various Sectors and Common Man
How to register for GST?
Various Goods and Services Tax forms
GST Rule Changes
Implementation of the GST in India
Costlier Or Cheaper Under GST?
