What is GST?
The current wind-word across all industries is GST. Since the Rajya Sabha passed a constitutional amendment to incorporate a system of Goods and Services Tax in India, the reform has set a wave of revolution across the nation. Goods and Services Tax (GST) is a method of indirect taxation in India for culminating all present taxes into one single system of taxation. The Act was passed as The Constitution Act 2016 (101 Amendment) governed by the Union Finance Minister, Mr. Arun Jaitley. To be specific, GST is an extensive approach of imposing indirect taxes on production, sale as well as consumption of goods and services throughout India; the objective of GST is to substitute individual tax entities levied by the Central and State governments.
What did current GST Bill of 2017-18 claim?
The GST Act of 2017-18, supposedly to be implemented from 1st July 2017, would involve assorted taxes including VAT, service tax, and excise duties. It aims to rationalize the present indirect taxation regime for providing a stable economic growth. Henceforth, GST will uphold four set standard tax rates i.e 5%, 12%, 18%, 28% respectively. The proposed GST rate is being currently discussed at 26.88 percent (12.77 percent at the centre and 13.91 percent at the state). On a global scale, the current GST rate is somewhere between 14-16 percent. Though the boons of having a single taxation have been of great significance to every sector, it has impacted E-commerce in India the most (especially cross-border eCommerce). The reason why global online sellers in India are extremely enthusiastic about it is because till now they were burdened with a plethora of taxes for any given successful cross-border sales. To make things worse, different statutory forms and AWBs (Air Way Bills) applicable added on to the complexities of declaring the tax turnovers to tax departments of respective states in India.
In what way will GST Bill impact Indian and Global Ecommerce?
Incorporation of GST Bill is likely to benefit global E-commerce the most. Destination based tax is a basic principle of GST. Importers are going to be taxed at a rate at which the products are manufactured and consumed with the jurisdiction of the origin country. Exporters, on the other hand, are going to be taxed at a zero rate and are allowed to claim refunds for input tax credit. This is going to make export and import oriented industries much more competitive on an international scale. This will further give momentum to exports and register a setback for imports thereby encouraging Indian online sellers for cross-border eCommerce.
GST could finally come up with a tax framework for global E-commerce that was already confronting identity crisis in this regard. It has been immensely useful in the movement of products for cross-border eCommerce as many supply chain issues got addressed leading to quicker deliveries. With a standardized tax, there is no requirement of guessing the different taxes that apply for cross-border eCommerce transactions and thus more number of Indian online sellers are intending to go global.
Image Courtsey: Rediff Realtime News
71 total views, 1 views today