Wednesday, December 16, 2009

India moving closer to adopt GST

The 13th Finance Commission (TFC) has endorsed its proposal for single goods and services tax (GST) and recommended a “revenue-neutral” rate of 12% – Livemint.

Of the 12%, 5% will go to the center and 7% to the states. From the state’s share, 2% will go to third tier of governments made up of panchayats and local bodies.

Currently different states charge different tax rates for the same goods and services and there’s an incentive for an individual to purchase goods from a state where tax rates are lower. The difference in tax rates sometimes lead to the smuggling of goods as well.

Once adopted, GST will enable uniform tax rates for similar goods and services across the country. It would economically unify the country, reduce the incidence of tax and ensure greater revenue through better compliance. Most of developed countries of the world use GST.

The union government had promised to adopt GST by 1st April 2010, but has been unable to get the states to agree to the schedule. Some states fear that they would lose their existing tax revenues if they adopt GST.

To take care of this apprehension, the commission recommends creating a ‘safety net’ (a compensation fund with a corpus of Rs. 30,000 crore) in five years by the center. Any state which suffers a revenue loss from implementing GST shall be compensated using the safety net.

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7 comments:

Anonymous said...

Nice information. For more on gst in india please see my site www.gstindia.com

topoffers.com said...

Great info. India is a vastly developing country. Good to see some financial information on the country as a whole. Thanks

PENNY STOCK INVESTMENTS said...

Enough taxes

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GST will streamline the nation's expense administration by solidifying an expansive number of backhanded assessments forced on exchanges of products and administrations at the focal and state levels. These incorporate traditions obligation, focal extract obligation, administration treformax, state VAT and extravagance charge, yet prohibit traditions obligation on imports. The change is because of be taken off by 1 April 2016.

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Twinkas said...

Nice Information, GST probably boost the indian economy as well.