Ministry of Finance has released its Model Goods & Services Law on June 14, 2016. It's a blanket indirect tax that will subsume several indirect state and federal taxes such as value added tax (VAT) and excise duty, and different state taxes, central surcharges, entertainment tax, luxury tax and a slew of related levies by local bodies.
The GST is likely to be at 18 per cent, and is widely to be implemented from 1st July 2017.
GST is a 'destination-based' tax, which means it's charged where goods are consumed, as opposed to where they are produced. Because it shifts the power that several Indian states have had in imposing indirect taxes on the production and movement, a centralised GST Council has been set up that will decide which taxes will fall in the purview of states and which can be subsumed into the GST. A dispute resolution mechanism will also be established to resolve any GST-related disputes.
OBJECTIVES OF GST
For the existing businesses we can provide comparative statements of the last 3 years financial results with the projected statements for the subsequent two years to facilitate roll over/Enhancement of the continuing financial facilities as per the requirements of financial institutions/banks time to time.
India's new Goods and Services Tax (GST) will significantly improve the country's business environment. If GST is implemented effectively, it will have large-scale benefits for multinational companies at all stages of the supply chain, including procurement and sourcing, manufacturing, distribution, and pricing. In this post, I will discuss the implications of GST for multinationals importing into India and for those manufacturing in the country.
Two benefits for companies importing into India:
Four benefits for companies manufacturing in India:
The most important benefit for multinational companies with manufacturing capabilities in India will be a fundamental mindset shift regarding how decisions are made. Tax considerations will be replaced by commercial viability considerations, which will lead to more efficient and profitable business units.
Some general benefits for all multinationals:
In the long term, if it is implemented efficiently, GST will allow multinationals that are currently importing to consider opening manufacturing units in India. Multinationals with manufacturing capabilities may consider expanding their footprint as a result of lower costs and gains from the economies of scale. Such large-scale changes in operations warrant an evaluation of the GST’s potential impact on companies’ supply chain.
GST will turn India into one common market, leading to greater ease of doing business and big savings in logistics costs from companies across all sectors. Some companies will gain more as the GST rate will be lower than the current tax rates they pay, others will lose as the rate will be higher than the present effective rate. While the rate of GST is yet to be decided, industry observers have assumed an 18% rate recommended by a government panel in making their impact calculations. That the likely positive and negative impact across sectors.