WHAT IS GST ?  GOODS & SERVICE TAX (GST) IS A SINGLE COMPREHENSIVE VALUE ADDED TAX ON MANUFACTURE, SALE AND CONSUMPTION OF GOODS AND SERVICES AT A NATIONAL LEVEL WHICH WILL BE FINALLY LEVIED AT THE POINT OF ULTIMATE CONSUMPTION. FOR NOW, PETROLEUM PRODUCTS & ALCOHOL HAVE BEEN EXCLUDED FROM GST, AND WILL CONTINUE TO BE TAXED BY THE STATES  SEPARATE RATES FOR GST WILL APPLY DEPENDING UPON CATEGORY: I) STANDARD RATE APPLICABLE TO MOST GOODS & SERVICES II) LOWER RATE FOR ESSENTIAL ITEMS III) HIGHER RATE FOR DE-MERIT ITEMS LIKE TOBACCO, LUXURY GOODS, ETC

GST : WHY CONSTITUTION AMENDMENT IS NEEDED?  ARTICLE 246 OF THE CONSTITUTION DISTRIBUTES LEGISLATIVE POWERS INCLUDING TAXATION BETWEEN PARLIAMENT & STATE LEGISLATURES  LISTS I AND II OF SEVENTH SCHEDULE OF THE CONSTITUTION INDICATE THE 13 AND 19 HEADS OF TAXATION APPLICABLE TO THE UNION OF INDIA AND STATES RESPECTIVELY  SINCE GST IS A SINGLE TAX WHICH REPLACES A HOST OF UNION AND STATE TAXES AN AMENDMENT OF THE CONSTITUTION IS NECESSARY TO ALLOW ITS INTRODUCTION

GST : WHY CONSTITUTION AMENDMENT IS NEEDED?  THE GST CONSTITUTION AMENDMENT BILL PASSED BY BOTH RAJYA & LOK SABHA PROVIDES FOR A GST COUNCIL COMPRISING OF REPRESENTATIVES OF THE UNION OF INDIA AS WELL AS THE STATES TO DELIBERATE & DECIDE UPON KEY POLICY ISSUES LIKE RATES OF GST, ALLOCATION OF REVENUES BETWEEN UNION AND STATES, EXEMPTIONS FROM GST, SEPARATION OF ADMINISTRATIVE CONTROLS BETWEEN UNION AND STATES, ETC.  HENCE GST TAKES INTO ACCOUNT THE INTERESTS OF BOTH THE UNION OF INDIA AND THE STATES AND IS COMPATIBLE WITH THE FEDERAL STRUCTURE OF THE CONSTITUTION.

GST : IMPACT ON GROSS DOMESTIC PRODUCT(GDP)

 THE GST RATE PROPOSED FOR THE STANDARD CATEGORY OF GOODS & SERVICES IS 18% TO 20%, WHEREAS THAT FOR THE ESSENTIAL ITEMS MAYBE 15% AND THAT FOR THE DE-MERIT ITEMS 30% TO 35%. THESE RATES (RNR) WILL BE DECIDED BY THE GST COUNCIL TO ENSURE THAT THE TOTAL TAX REVENUES REMAIN SAME AS BEFORE THE INTRODUCTION OF GST.

GST : IMPACT ON GROSS DOMESTIC PRODUCT(GDP)  SINCE GST IS A SINGLE VALUE ADDED TAX LEVIED AT THE POINT OF FINAL CONSUMPTION THE CASCADING EFFECT OF TAX ON TAX IS ELIMINATED LEADING TO LOWER COSTS.  THERE WILL BE GREATER TRANSPARENCY IN TAX ADMINISTRATION AND LESS CORRUPTION AS PROPER DOCUMENTATION WILL BE ESSENTIAL TO AVAIL OF TAX CREDITS.  THE TAX BASE IS LIKELY TO EXPAND LEADING TO HIGHER TAX COLLECTIONS.

GST: IMPACT ON GROSS DOMESTIC PRODUCT (GDP)  THERE WILL BE NO NEED FOR CHECK POINTS AT STATE BOUNDARIES AS GOODS WILL MOVE FREELY BETWEEN STATES. TRANSPORTATION WILL BE FASTER AND MORE COST EFFECTIVE.  REQUIREMENT OF WAREHOUSES TO STOCK GOODS AT STRATEGIC LOCATIONS TO TAKE ADVANTAGE OF LOWER TAXATION IN SOME STATES WILL NOT ARISE.

GST : IMPACT ON GROSS DOMESTIC PRODUCT(GDP)  IT IS EXPECTED THAT THE COST OF LOGISTICS IN INDIA (COMPRISING OF WAREHOUSING, INVENTORY AND TRANSPORTATION COSTS) WHICH IS PRESENTLY ABOUT 14% OF GDP, AS COMPARED TO 7-8% IN DEVELOPED COUNTRIES, WILL COME DOWN SIGNIFICANTLY.  WITH ABOVE BENEFITS, THE COST OF MOST GOODS IS LIKELY TO DECREASE WHICH SHOULD LEAD TO LOWER PRICES STIMULATING HIGHER DEMAND FOR GOODS AND SERVICES IMPACTING THE GDP POSITIVELY.

GST: IMPACT ON GROSS DOMESTIC PRODUCT (GDP) IT IS ESTIMATED THAT THE GDP WILL RISE BY ABOUT 2% UPON FULL IMPLEMENTATION OF GST.