GST Is The ‘Brahmastra’ For Indian GDP – Assocham; Here Are 5 Ways It Can Transform Indian Economy
Mythology: In ancient Sanskrit writings, Brahmastra (in Sanskrit) is a weapon created by Lord Brahma, which is regarded as the most powerful weapons of all; which can never miss it’s target and once its discharged, neither a counterattack nor a defense that could stop it.
As the Winter session of Parliament started this week, the focus of the business community has now centered on the passing of GST or Goods and Services Tax Bill in the Rajya Sabha.
GST was passed in the Lok Sabha in May this year, when it was described as the biggest business reform India has ever seen since 1947. Experts had claimed that successful implementation of GST can boost our GDP by 2%.
The bill is now stuck in the Rajya Sabha, where it will need some support from both the ruling party and opposition party to get it passed.
Highlighting the importance and relevance of GST Bill, Assocham (The Associated Chambers of Commerce of India) has said that it’s the ‘Brahmastra’ of India GDP, which can transform our economy. In an interview, Assocham President Sunil Kanoria has earnestly pleaded to all political parties to support the bill, and help Indian economy become stronger.
He said, “Goods and Services Tax is a key ‘Brahmastra’ for our Gross Domestic Product (GDP).Lawmakers across parties should pass the Constitutional Amendment Bill on GST without further delay”.
As per Sunil, GST’s successful implementation would give a strong signal to the foreign investors about our ability to support business, besides; it will enable wide-scale changes in the tax structure which will have long term positive effects on our economy.
Assocham has clearly said that ‘timely implementation’ of GST would boost our economy by 1.5-2%.
5 Ways GST Can Transform Indian Economy
a) Compared to 700 km per day travel an American truck driver does in a day, an Indian truck driver only travels 280 kms in a day. Global average is 400 km/day. This slow movement of trucks is solely because of huge number of toll taxes which they are supposed to pay. As per UBS Securities, there are 650 different types of checkposts in India and 11 categories of different road transport taxes. By introducing GST, we can boost the distance travelled by trucks to 20% per day, which will result in improvement in productivity by 12%.
b) Central Govt. taxes: central VAT or excise duty, services tax, central sales tax on inter-state sales and State level taxes: VAT on sales, entertainment tax, luxury tax and octroi and entry taxes levied by municipalities would be abolished, leading to smooth flow of goods and services across the country. A unified market would be created in India.
c) Tax evasion would be saved, as right now, the companies are required to pay tax on the entire value of goods and services; however, after GST, they will be paying tax only on the value-addition. Thus, the incentive to evade tax would be lowered, leading to more companies paying taxes.
d) GST will enable small businesses from unorganized sector to pay taxes, as the net would be widened, and these SMEs would be provided incentives for paying their taxes.
e) As per experts, India will gain $15 billion per year, after implementation of GST. This will lead to more exports, more employment opportunities, and the gap between manufacturing and services would be lessened to a greater extent.
The good thing is that, Rahul Gandhi, Vice President of Congress Party has said that they will support GST in Rajya Sabha. This effectively removes all doubts pertaining to GST, and its implementation.
Its only a matter of time before GST is passed and Indian business leaps a giant stride towards an empowered environment for better opportunities and improved tax structure.
We will keep you updated as more details come in.