|Introduction: Contextual introduction.|
Body: Write arguments in favour of single rate GST and also write some associated issues.
Conclusion: Give a way forward.
Goods and Services Tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption. It is paid by consumers, but it is remitted to the government by the businesses selling the goods and services. It is an Indirect tax which is introduced to replace other Indirect taxes such as value added tax, service tax, excise duty etc. Currently the GST has four slabs -5%, 12%, 18% and 28% besides zero.
Why is it desirable?
- On the lines of One-Nation, One- Tax: A single-slab GST has the potential to unite the market in essence and also promote unity.
- Compliance simplicity: One tax rate simplifies the adherence to the tax-related rules & regulations. Uniformity in rates of various products in a commodity group will solve the problem of classification disputes.
- Avoids the concept of One Goods and Multiple Tax Rates: Currently, both the value-added tax structure in states and also the central excise structure is loaded with divergences in rates within a particular category.
- Ease of Doing Business: A unified GST rate allows traders to easily file GST online. It eases up the process as it eliminates issues pertaining to the multiple slabs.
- A unified GST rate would also reduce the litigations.
- Since GST is a regressive tax, it would not be fair to have a single rate structure unless there are instruments to protect the poor who get hurt by rising costs.
- It may not be implementable at this stage due to political economic considerations.
- Before jumping to single rate, first a two or three-rate structure can be adopted.
The need of the hour is to reduce the rate categories. Single rate for one product group will bring simplicity in the structure and make implementation easier.