GST Impact On Housing Societies
What is GST?
GST – Goods & Services Tax is all set to be one of the most impactful economic reforms to be implemented in last few decades and is already being labeled as a major social reform too.
What Is Wrong with The Current Tax System?
Though India is politically one country, economically it is fragmented. There are multiple taxes when there is commerce across state borders. Consequently, it increases costs for everyone and makes economic activity within India for Indians complicated.
Presently, taxes are of two types – Direct and indirect, which are levied either by the central government or the state government. Direct taxes, like your income tax come under the central govt. And taxes levied on the manufacture of goods and providing services are called as indirect taxes, they are also levied by the central govt. Taxes on consumption are exclusively levied by the state government.
The issue with this system is that sometimes, a product may have multiple tax layers to it. Eg – consider a dress. It first needs to be manufactured before it is consumed. So the Centre levies a tax at the factory level and then the state levies a tax at the shop (VAT), just before it is consumed. On an average, excise duty is charged at 12% and VAT at 18%, that means an average consumer pays 26% in taxes. The resultant MRP is therefore, a lot higher than the actual retail price.
GST is an indirect tax and will attempt to create a single market for goods by taking away the tax barriers between the various states.
Is GST Beneficial to Us?
Yes, we certainly feel so. As of now, the average consumer has very little visibility into how much of the price he pays for something is taken up by taxes. We do see the VAT in the bill, but before the product reached the shop, the center has levied an excise tax on it. With GST, taxes will be levied solely for consumption and is therefore, expected to bring about more transparency. Also, there will be no more “tax on tax” system.