Gujrat Tax and economic reforms

Gujrat Tax and Economic Reforms

Gujarat Goods and Service Tax: The Gujarat Legislative Assembly ratified and passed the newly introduced State Goods and Services Tax (GST) Bill and became the third state after the Telangana and UP.

GST will abolish all the Taxation related disputes between the States and this will make Indian economy more strong.
After implementation of GST, the state will lose some tax income but the Centre has agreed to provide 14 per cent compensation for the next five years.
As per the new Bill, the existing Value Added Tax (VAT) Act will be withdrawn after the passing of the new GST Bill in the Gujarat Assembly. However, the Indirect Tax in the form of VAT will continue to be levied on petroleum products such as petrol, diesel, crude oil, natural gas, liquor and aviation turbine fuel (ATF).

Goods and Services Tax (GST) is a comprehensive indirect tax on manufacture, sale, and consumption of goods and services throughout India. GST would replace respective taxes levied by the central and state governments.

What is GST?

It is a destination-based taxation system.
It has been established by the 101st Constitutional Amendment Act.
It is an indirect tax for the whole country on the lines of “One Nation One Tax” to make India a unified market.
It is a single tax on supply of Goods and Services in its entire product cycle or life cycle i.e. from manufacturer to the consumer.
It is calculated only in the “Value addition” at any stage of a goods or services.
The final consumer will pay only his part of the tax and not the entire supply chain which was the case earlier.
There is a provision of GST Council to decide upon any matter related to GST whose chairman in the finance minister of India.

What taxes at center and state level are incorporated into the GST?

At the State Level

State Value Added Tax/Sales Tax
Entertainment Tax (Other than the tax levied by the local bodies)
Octroi and Entry Tax
Purchase Tax
Luxury Tax
Taxes on lottery, betting, and gambling

At the Central level

Central Excise Duty
Additional Excise Duty
Service Tax
Additional Customs Duty (Countervailing Duty)
Special Additional Duty of Customs

Benefits of GST

For Central and State Governments

Simple and Easy to administer: Because multiple indirect taxes at the central and state levels are being replaced by a single tax “GST”. Moreover, backed with a robust end to end IT system, it would be easier to administer.
Better control on leakage: Because of better tax compliance, reduction of rent seeking, transparency in taxation due to IT use, an inbuilt mechanism in the design of GST that would incentivize tax compliance by traders.
Higher revenue efficiency: Since the cost of collection will decrease along with an increase in the ease of compliance, it will lead to higher tax revenue.

For the Consumer

The single and transparent tax will provide a lowering of Inflation.
Relief in overall tax burden.
Tax Democracy that is luxury items will be taxed more and basic goods will be tax-free.

For the Business Class

Ease of Doing Business will increase due to easy tax compliance.
Uniformity of tax rate and structure, therefore, better future business DECISION MAKING and investments by the corporates.
Removal of cascading effects of taxes.
Reduction in transactional cost will lead to improved competitiveness.
Gain to the manufacturer and exporters.
It is expected to raise the country GDP by 2% points.

GST Council

It is the 1st Federal Institution of India, as per the Finance minister.
It will approve all decision related to taxation in the country.
It consists of Centre, 29 states, Delhi and Puducherry.
Centre has 1/3rd voting rights and states have 2/3rd voting rights.
Decisions are taken after a majority in the council.

Supporting Laws to implement GST

For the implementation of GST, apart from the Constitution Amendment Act, some other statutes are also necessary. Recently 5 supporting laws to the GST were recommended by the council. 4 for the bills should be passed by the parliament, while the 5th one should be passed by respective state legislatures. The details are given below.

The Central Goods and Services Tax Bill 2017 (The CGST Bill).
The Integrated Goods and Services Tax Bill 2017 (The IGST Bill).
The Union Territory Goods and Services Tax Bill 2017 (The UTGST Bill).
The Goods and Services Tax (Compensation to the States) Bill 2017 (The Compensation Bill).
And a state GST will be passed by the respective state legislative assemblies.

Tax slabs are decided as 0%, 5%, 12%, 18%, 28% along with categories of exempted and zero rated goods for different Types of Goods and services.
Further, a cess would be levied on certain goods such as luxury cars, aerated drinks, pan masala and tobacco products, over and above the rate of 28% for payment of compensation to the States.
However, which goods and services fall into which bracket is still an enormous task to be completed by the GST council.
Highest tax slab is pegged at 40%.

DEMONETIZATION AND CASHLESS ECONOMY

What is Demonetization?

It is a financial step where in a currency unit’s status as a legal tender is declared invalid.
This is usually done when old currency notes are to be replaced with the news ones.
The 500 and 1000 rupee notes seized to be a legal tender from 8 November, 2016.

A brief past

Demonetisation was earlier done in 1978 When the government demonetised Rs. 1000, Rs. 5000 and Rs. 10000 notes.
This was done under the High Denomination Bank Note (Demonetisation) Act, 1978.
The difference between 1978 and 2016 Demonetisation is that the currency in circulation (of the higher denomination) is higher in 2016 than was in 1978.
The current demonitization has been done by government under section 26(2) of the Reserve Bank of India Act.

Implications of Demonetization

A parallel black economy would collapse.
Of the Rs 17 lakh crore of total currency in circulation in the country, black Money is estimated at mind-boggling Rs 3 lakh crore.
Counterfeit currency: Death blow to the counterfeit Indian currency syndicate operating both inside and outside the country.
On EMPLOYMENT: a large part of the Indian economy is still outside the Banking system. So, the cash shortage will hurt the informal sector that does most of its transactions in cash.
On Elections: It will reduce the Vote-for-Note politics making elections more clean and transparent.
On Economy:
First, it will bring more borrowings to the exchequer, improve inflation outlook and increase India’s gross domestic product (GDP).
Second, it will revive Investment opportunities and give a fillip to Infrastructure-2/”>INFRASTRUCTURE and the manufacturing sector.
Third, it will help reduce interest rates and lower Income tax rate.
Real estate cleansing: An unexpected dip in land and property prices.
On Higher Education: will become more reachable as the black money from ‘high capitation fees’ is discouraged.
On security:
Terror financing: Terror financing is sourced through counterfeit currency and hawala transactions.
Kashmir unrest: The four-month-long unrest in Kashmir valley is on a backburner
North-East insurgency and Maoists: Black money is the Oxygen for Maoists collected through donations, levy and extortions. The illicit money is used to purchase arms and ammunition

Chatrapati Shivaji Mahara jShetkari Sanman Yojana – 2017:

The Maharashtra State Government has introduced the farmer’s list under ChhatrapatiShivajiMaharajShetkariSanmanYojana CSMSSY 2017. CSMSSY 2017 is a farm loan waiver scheme of Maharashtra Government, under the scheme the state government will waive the agriculture loan of the farmers of Maharashtra. Farmers can check their name in the list is available at district wise, block-wise and Gram Panchayat wise. Farmers can also check their name at csmssy.in

The eligible and needy farmers who have registered for CSMSSY 2017 were provided an application id and district wise, taluka wise and Garmpanchayat/ Nagarparishad wise farmer list can be accessed

According to the official website of the CSMSSY, 4607203 total numbers of registrations have been done by the farmers in Maharashtra on the portal while 3928529 farmers have applied for the farm loan waiver scheme till 31st August.

Gujarat is one of the most prosperous states in India, with a strong economy and a high standard of living. The state has a long history of economic reforms, which have helped to create a favorable Environment for business and investment.

One of the most important economic reforms in Gujarat was the introduction of the Gujarat Value Added Tax (GVAT) in 2003. The GVAT is a single-stage, value-added tax that replaced the state’s complex sales tax system. The GVAT has made it easier for businesses to do business in Gujarat, and has helped to reduce the cost of goods and services.

Another important economic reform in Gujarat was the introduction of the Gujarat Stamp Act in 2007. The Stamp Act simplified the state’s stamp duty system and made it easier for businesses to register property and conduct other legal transactions. The Stamp Act has helped to reduce the cost of doing business in Gujarat and has made it easier for businesses to operate in the state.

Gujarat has also made significant progress in improving its infrastructure. The state has invested heavily in roads, bridges, Airports, and other infrastructure projects. This has helped to improve the state’s connectivity and has made it easier for businesses to operate in Gujarat.

Gujarat has also made progress in improving its education and healthcare systems. The state has invested heavily in schools, colleges, and hospitals. This has helped to improve the Quality Of Life for Gujaratis and has made the state more attractive to businesses.

Gujarat’s economic reforms have been successful in creating a favorable environment for business and investment. The state has a strong economy and a high standard of living. Gujarat is a good place to do business, and the state’s economic reforms are likely to continue to attract businesses and investment in the future.

Here are some additional details about the economic reforms mentioned above:

The Gujarat Value Added Tax (GVAT) is a single-stage, value-added tax that replaced the state’s complex sales tax system. The GVAT was introduced in 2003 and has made it easier for businesses to do business in Gujarat, and has helped to reduce the cost of goods and services.
The Gujarat Stamp Act was introduced in 2007 and simplified the state’s stamp duty system. The Stamp Act made it easier for businesses to register property and conduct other legal transactions. The Stamp Act has helped to reduce the cost of doing business in Gujarat and has made it easier for businesses to operate in the state.
Gujarat has also made significant progress in improving its infrastructure. The state has invested heavily in roads, bridges, airports, and other infrastructure projects. This has helped to improve the state’s connectivity and has made it easier for businesses to operate in Gujarat.
Gujarat has also made progress in improving its education and healthcare systems. The state has invested heavily in schools, colleges, and hospitals. This has helped to improve the quality of life for Gujaratis and has made the state more attractive to businesses.

Overall, Gujarat’s economic reforms have been successful in creating a favorable environment for business and investment. The state has a strong economy and a high standard of living. Gujarat is a good place to do business, and the state’s economic reforms are likely to continue to attract businesses and investment in the future.

What are the benefits of tax reform?

Tax reform can provide a number of benefits, including:

Increased economic Growth: By reducing the tax burden on businesses and individuals, tax reform can encourage investment and economic activity.
Increased government revenue: By making the tax code simpler and fairer, tax reform can increase tax compliance and generate more revenue for the government.
Reduced POVERTY and inequality: By providing tax relief to low- and middle-income families, tax reform can help to reduce poverty and inequality.

What are the challenges of tax reform?

Tax reform can be a complex and challenging process. Some of the challenges include:

Political opposition: Tax reform often faces opposition from special interests who benefit from the current tax code.
Technical complexity: Tax reform can be technically complex, and it is important to ensure that any changes are implemented in a way that does not create unintended consequences.
Economic uncertainty: Tax reform can create economic uncertainty, as businesses and individuals try to understand how the changes will affect them.

What are the different types of tax reform?

There are a number of different types of tax reform, including:

Base-broadening: This type of tax reform involves reducing tax rates while also broadening the tax base, which means increasing the number of people who are subject to taxation.
Rate reduction: This type of tax reform involves simply reducing tax rates.
SIMPLIFICATION: This type of tax reform involves making the tax code simpler and easier to understand.
Fairness: This type of tax reform involves making the tax code fairer by reducing the tax burden on low- and middle-income families.

What are the pros and cons of each type of tax reform?

Each type of tax reform has its own pros and cons. Base-broadening can generate more revenue for the government, but it can also be regressive, meaning that it places a greater burden on low-income families. Rate reduction can stimulate economic growth, but it can also lead to higher deficits. Simplification can make the tax code easier to understand and comply with, but it can also make it more difficult to target tax breaks to specific groups. Fairness can reduce inequality, but it can also make the tax code more complex.

What is the future of tax reform?

The future of tax reform is uncertain. The Trump administration has proposed a number of tax reform measures, but it is unclear whether these measures will be enacted. It is also possible that future tax reform will be focused on other issues, such as tax simplification or fairness.

The Gujarat government has announced a number of Tax Reforms in recent years. Which of the following is not one of these reforms?
(A) The introduction of a new VAT system
(B) The reduction of Corporate tax rates
(C) The introduction of a new personal income tax system
(D) The introduction of a new sales tax system
The Gujarat government has also announced a number of economic reforms in recent years. Which of the following is not one of these reforms?
(A) The Privatization of state-owned enterprises
(B) The deregulation of the economy
(C) The introduction of a new labor law
(D) The introduction of a new land acquisition law
The Gujarat government’s tax and economic reforms have been credited with helping to improve the state’s economy. Which of the following is not one of the benefits of these reforms?
(A) Increased investment
(B) Increased employment
(C) Increased economic growth
(D) Increased inflation
The Gujarat government’s tax and economic reforms have also been criticized by some. Which of the following is not one of the criticisms of these reforms?
(A) The reforms have benefited the rich at the expense of the poor
(B) The reforms have led to increased inequality
(C) The reforms have led to Environmental Degradation
(D) The reforms have led to Corruption
Overall, the Gujarat government’s tax and economic reforms have had a positive impact on the state’s economy. However, there are some concerns about the distribution of the benefits of these reforms and the potential environmental and social costs.