GST also referred to as Goods and Services Tax is in existence in over 150 countries across the world and India is in fact late in joining the bandwagon. GST is believed to increase the country’s GDP by a maximum of 2% and is expected to ease the task of conducting business in India.
Before the implementation of GST comes into reality, let us explore some of the misconceptions about the taxation method.
Myth 1: GST would make India a country with one tax rate
GST would in fact unify a lot list of taxes in the country including VAT, sales tax, service tax, excise duties, luxury tax and so on. However, some taxes like road tax, property tax, customs duty will continue to exist. Also, certain goods like alcohol and tobacco will be exempted from GST. This is in face one of the reasons for the public to turn skeptical about the new system.
Myth 2: The expected GST rate would be 27%
27% being the GST rate would be just a rumor. Different bodies have suggested different rates and Finance Minister has expressed his view of 27% being too high. The Finance Commission considers 18% as a possible GST rate which would eventually go down in the following years. While there is yet to hear a final word on the same, it is best to ignore these baseless, exaggerated rumors.
Myth 3: Potential lowering of costs of final products to consumers
There is a high potential for the cost of products to be lowered but there is still heavy suspicion over the same. In order for the cost benefits of GST to be passed on to the consumers, certain compliance measures must be introduced and the same must be followed by the manufacturers as well as sellers.