A Very important new tax legislation in India passed by the Indian government for growth. Last August 3, the Upper House of the Indian Parliament approved the GST (Good and Services Tax, meaning the tax on goods and services), which is already configured as one of the greatest legislative reforms passed in India after the 1991 economic opening. The current Finance Minister, Arun Jaitley, announced that the new law will enter Effective as of April 1, 2017, coinciding with the new fiscal year.
This is a measure that was first proposed in the 2006-07 fiscal year, but at the time it encountered a series of difficulties and was no longer implemented; ten years later the Modi Government, after months of difficult negotiations, succeeded in getting it approved and achieving this important goal.
GST promises to be. of particular importance for the Indian economy. Specifically, through the implementation of this reform, It is intended to replace all existing indirect taxes, both local and central (including Excise Tax, Sales Tax and Service Tax) with a single lower tax, precisely the GST: in this way it will be easier to implement the necessary tax controls, discouraging tax evasion.
But how it will work From a practical point of view?
GST takes the form of a consumption tax and it will be applied to goods and services at the time final consumption takes place: it will be included in the price of value-added goods and services, at every single step of the purchase or sale of goods within the entire production chain. The manufacturer, wholesaler, or retailer will pay this tax, which can nevertheless be refunded as it is subject to tax deduction; it will therefore be the final consumer who actually pays the tax. Through this mechanism the “cascade effect” of taxation will be avoided, preventing the payment of tax on tax.
New Delhi's goal is create uniformitythe GST will in fact be uniform for all goods and services, therefore the Central Government and all Indian states will tax goods and services with the same tax. For example, if 20% is the percentage allocated for a certain good, the federal government and the states will each collect 10%, and the revenue collected will be divided between the two parties.
In this regard, it has been calculated that The effect of introducing the GST could lead to a price reduction of 16%: this will result in a probable increase in consumption and employment and in a increased foreign investment.
This the process scheduled by the Government for the definitive implementation of the law:
The Modi government, after the campaign Make in India and the measures included in the latest Budget Law, continues in its path of strong economic change in the country, with the aim of create an increasingly open, dynamic, and business-friendly environment. The implementation of this major tax reform in India will boost economic growth, increase domestic consumption, and facilitate foreign trade relations, attracting numerous international investors.
If want more information in to the new tax regulations in India and if Do you want to know more about Octagona's operational activities, contact us at the telephone number 059.9770184 or to the e-mail address [email protected]: you will receive all the information you need.
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