What is GST? How is It Beneficial for Citizens and NRIs?
Tax is the biggest concern for anyone whose income exceeds the exemptions. Sharing a part of your hard-earned money in the form of several taxes is painful. We would be alien to that pain if there would have an identical type of tax.
Perhaps the legislators have heard what you wished. Tax provisions have been revised. The norms which were once drafted 16 years ago are now going to be executed.
“Goods and Services Tax (GST)” is finally tabled in the Lok Sabha of India. No sooner it will be implemented the identical tax structure would be prevailed. A GST council will be set up very soon to look into the implementation of the GST law via a national portal.
In many countries like Australia, France & Germany, this law is already in the execution. However, the GST limit is variable in every country.
As aforementioned, the GST stands for the Goods and Services Tax. It eliminates payment of multiple taxes levied in various forms. Indeed, it’s an indirect tax that is constituted to kick out the pain of paying multiple taxes.
Earlier, around 20 types of different taxes were levied on multiple goods and services. Some of them were imposed upto 50% of the total cost. Thereby, the commoners had to bear unwanted pain of multiple taxes on one product/service. But very soon, this revised law would level all taxes up to 18%. It implies that the products and services in Delhi would cost similar to the same product and services in any other state, like Mumbai, Kolkata and Chennai.
Components of GST:
This tax is a right combination of:
· CGST (Central goods and services tax- central govt.)
· SGST (State goods and services tax-state govt.)
· IGST (integrated goods and services tax).
As reflects from the name, the first component is levied by the central government while the second component is imposed by the state government. And as far as the IGST is concerned, it is shared between the states which exchange the goods and services with each other.
How would it be calculated?
Once the ‘one country, one tax’ law would be enforced, various kinds of different taxes, including service tax, custom duty, excise duty, VAT, additional duty of custom, entertainment tax and luxury tax would be banished or come to their end.
But aforesaid taxes would be no more when this tax law would come in to force. Before such happening, the tax is calculated by deducting the discount on a particular good or service. It means that the discount price would be deducted and the tax is calculated on the rest of the price.
But now, the GST would be calculated on the Market Retail Price (MRP). Several hearsays are in the air regarding its negative impact. Inflation may likely to prevail once it is executed.
Impact of GST implementation on Indians and NRIs:
· The stalwarts of the economy have premeditated that it can up the Gross Domestic Product (GDP) by 1% or 2%. They have crossed their fingers along with the laymen to wait and watch its impact when it is executed.
· Rather than levying differently, one type of tax would be executable throughout India. Thereby, the citizens as well as non-residents would be able to pay tax identically for all services, like certificate attestation to India and passport for immigration.
· Tax on canned food would be 18%. It’s really disappointing that the canned eatables would be costlier. The expats and citizens have to pay 5% to 6% before its execution.
· Most of individuals of Indian diaspora would have to pay more if they import jewellery from Dubai or gulf countries. It’s a common tendency that people return with lots of gold ornaments from these countries. It is quite cheaper since the duty was just 5% on jewels. But now, it would also be 18%. But yes, there would have no other kind of tax to levy.
· This revision would make the credit card service and mobile service 3% dearer. They cut on 15 % tax before this rule but now, it would also roll up to 18%.
· Non-residents should be happy because the tax on houses or properties and small SUVs would be rolled down to 18 % from 30% to 44%. They can keep earning and safeguarding capital gain in their NRE or NRO or FCNR accounts. Before this revamping, they have to pay service tax and VAT separately which is a prodigal deal.
· The eatables in the restaurants would be cheaper.
· Home appliances, like Oven, would be cheaper. Before this rule, 12.5% excise duty is imposed while VAT is separately deducted upto 14.5%. The expats or non-residents can buy it from here at reasonable price.
· The tax levied on logistics and transport would come down to 18% from 20%. Thereby, the non-residents who invest in Indian property or business can get higher ROI. Although the industry domain has to face off 18 types of different taxes but the GST would definitely cut on tax and time for them.
How can it be beneficial for non-residents?
· The tax of highly taxed articles or commodities or services would be leveled to 18%.
· The entry of every sale would be entered online. Thereby, no possibility of parking black money would ever rise.
· The non-residents and residents would be able to register themselves on the GST portal through PAN number. It would let them escape the hassles of tax payment in-person.
· It would be like a piece of cake for assessing taxability, auditing, and decision-making for the Indian government as well as non-resident investors.