Today all eyes are fixed on Rio de Janeiro as Olympics 2016, have begun. The biggest sporting extravaganza was formally opened on 5th August, 2016 with a colorful ceremony and pageantry. The Indian Olympic Association has created history by sending the nation's largest ever delegation to this Summer Games 2016, a total of 120 athletes; 37 more than their previous record of 83 athletes in 2012. The challenges are awesome as we are pitted against a world-class competition. While women were showcasing their talent at Rio 2016, Dipa Karmakar scripted history as she became the first Indian to make the cut for the individual vault finals in her debut Olympics and together with her fierce determination to excel in life has made the nation proud. Congratulations Dipa!! And wish other participants all the luck in their chosen fields. On the national front, the GST which is the biggest reform in India’s indirect tax structure, since the economy was thrown open some 25 years ago, at last is set to become reality. The long-delayed Constitution Amendment Bill on GST was cleared by the Lok Sabha on 8th August, 2016. . The government has moved six official amendments, to the bill, including scrapping of 1% additional tax cleared by the Rajya Sabha. The passage was a victory of democracy and a great step by Team India to transform the economy, bring in transparency and usher in a system of “One Country, One Tax”-claimed by Mr. Modi. Following are a few points as to how Goods and Service Tax would change the face of Indian Economy:
- Unified Market- The GST will cut down the large number of taxes imposed by the central government and states. This will lead to the creation of a unified market, which would facilitate seamless movement of goods across states and reduce the transaction cost of businesses.
- Lower incentive to evade tax- Currently, companies have to pay taxes on entire underlying value of the product/service, but under GST, companies in a chain will have to pay tax only on the value-addition and at the final destination of consumption. So, the actual tax paid will likely be small and reduce the incentive for evasion.
- Widen tax base-GST will give credits for all taxes paid earlier in the goods/services chain incentivising tax-paying firms to source inputs from other registered dealers. This will bring in additional revenues to the government as the unorganised sector, which is not part of the value chain, would be drawn into the tax net. Besides, states will be allowed to tax services (as opposed to only the central government) under the GST.