Goods and Services Tax
The GST bill, which is scheduled to be effective from July 1, is the biggest tax reform being undertaken since Independence. It will subsume all indirect taxes to create one rate and integrate the country into a single market. Once the GST is in force, it will replace at least 17 state and federal taxes and bring them under single unified tax structure.
GST is a comprehensive indirect tax on manufacture, sale and consumption of goods and services throughout India to replace taxes levied by the central and state governments. It is expected to bring about a qualitative change in the tax system by redistributing the burden of taxation equitably between manufacturing and services.
Last year on November 8, the Prime Minister scrapped old Rs 500 and Rs 1,000 notes to what he called a step to root-out black money and fake currency in the system. Six months later, it was noticed that the move couldn’t achieve the desired results as fake currencies were still running and corruption was still rampant. However, the government succeeded in profiling the people by getting to know the differences between actual flow of money and the undeclared money. Recently ,it was reported that India has more car buyers than the taxpayers in the country.
In last assessment year, there were only 5.5 lakh people, out of the 3.65 crore individuals who filed returns, paid income tax of more than Rs 5 lakh and accounted for 57 per cent of the total tax collection. This essentially means that only 1.5 per cent of those filing tax returns (3.65 crore) were contributing to 57 per cent of tax kitty. The Prime Minister wanted to address this issue by bringing the unaccounted money into banking channel.