How other countries have implemented gst and how india is going to get benefits from it after its implementation?
Answers
France was the first country to implement GST to reduce tax- evasion. Since then, more than 140 countries have implemented GST with some countries having Dual-GST (e.g. Brazil, Canada etc.) model. India has chosen the Canadian model of dual GST.
Explanation:
POSITIVE SIDE OF GST • State level VAT has been introduced in our country mainly to eradicate the cascading effect i.e. tax on tax which used to happen in sales tax. After introduction of VAT, dealers are able to claim input VAT against output VAT. But the main drawback in VAT is, it is levied after the levy of excise duty and service tax, and is again causing the effect of cascading. Hence, effective implementation of GST will help in eradicating cascading effect. • Instead of maintaining big records, returns and reporting under different statutes, all assessees will find comfortable under GST, as the compliance cost will be reduced. It also simplifies the procedure of claiming input tax credit. • Due to full and seamless credit, manufacturers or traders do not have to include taxes as a part of their cost of production, which is a very big reason to say that we can see a reduction in prices. Hence GST leads to decrease in prices and helps price sensitive consumers. However, if the government seeks to introduce GST with a higher rate, this might be lost. • Export of goods/services is not going to be taxed under GST. Hence, It is good for export-oriented businesses and Indian goods can withstand global competition comfortably since their prices will comparatively decrease. This will result in rise in GDP and also favourable BOP. • By bringing all the indirect taxes into single basket, government will be able to cover each and every manufacturer, service provider, seller who are not made liable to tax earlier due to different exemptions from various laws. Also, simplified procedure also encourages dealers to comply with tax rules and procedures. DOWNSIDE OF GST • VAT has been first introduced in 1998, though it came into force in 2005. This type of a delay may become a potential threat to GST since many changes take place between law formulation and actual implementation. • GST is a consumption-based tax. This results in increase in revenue of state governments where consumption is comparatively high. • GST will really result in benefit the end consumers only if the laws formulated are followed and implemented both in letter and spirit. • A high GST rate will create even more problems rather than solving existing problems to the consumers. Similar to VAT, if different states opt for different SGST rates, the very purpose of introducing GST will be defeated. • Govt is not providing any guarantee that, after implementation of GST, prices of various goods and services will surely reduce. Unless govt. makes any rule or law, price hike or reduction is the prerogative of seller/manufacturer/service provider. CONCLUSION In my view, GST is not only a combination of VAT and other indirect taxes but also a step taken to eradicate the problems and to plug out the loopholes in the present indirect tax system. Implementation of GST, though, is likely to cause inflation in the initial stages, will surely result in more employment opportunities and economic growth in our country and Indians will become employment providers rather than employment seekers in near future.
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