India Inc and government all looked excited ahead of the implementation of India’s biggest tax reforms since Independence will become official at the stroke of midnight on Friday, June 30, one that the government says is founded on the concept of “one nation, one market, one tax.” The sixteen-year-in-the-making taxation system overhaul – which started with the Vajpayee government in 2000, later forged into existence by the UPA governments from 2007 to 2013 and finally shepherded through by the Modi government – is here now for better or worse.
The GST will replace the present very complex system where the Centre levies a central excise duty on goods up to the production stage and a service tax on services while the states levy a state VAT (value added tax) on sales of goods, but do not tax services. Each of these taxes has a VAT (value added tax) structure, but they are applied on different bases. And in addition, there are a number of additional taxes e.g. the additional duty, special excise duty and various central cesses by the Centre and luxury tax, entertainment tax, octroi etc. by the states. All these taxes by the Centre will be subsumed into a single central GST and the multiple state taxes by the state into a state GST (legally a different tax in each state). These taxes will be applied on a common base and at the same rate for each commodity across the country.
Businesses and traders with annual sales above Rs 20 lakh are liable to pay GST. The threshold for paying GST is Rs 10 lakh in the case of north-eastern and special category states.
