Meghalaya Tax and economic reforms

Meghalaya Goods and Service Tax:

The Meghalaya government introduced in the state assembly, the Meghalaya Goods and Services Tax Bill, 2017. GST will abolish all the Taxation related disputes between the States and this will make Indian economy more strong. It was the highest Tax Reforms of state and centre as well.

The Meghalaya government demanded the following amendments —

The GST Council accepted that green arecanut will be tax-free while processed arecanut or ‘supari’ will be taxed at 5 per cent only. So is also the case with dry fish in which the Council has agreed to bring down the tax from 12 per cent to 5 per cent
The other issues Meghalaya government had demanded was the reduction from Rs 50,000 to Rs 10,000 where a purchaser is not required to give his details in the invoice.

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

Economic Reforms:

The basic objective of economic reforms was to improve productivity Growth and competitiveness in the Indian manufacturing sector. These reforms were aimed at making Indian manufacturing sector more efficient and technologically up to date, with the expectation that these changes would enable Indian manufacturing sector to achieve higher and sustainable growth. The government started to deregulate the Indian economy with a Liberalization-2/”>Liberalization programme, focused on the investment pattern, trade policies, the financial sector, taxation and public enterprises.

In recent times, Industrialization has become the catch word of the midtwentieth century and industrial development of the under developed countries or developing countries like India. One of the great world crusades of our times, the Less Developed Countries (LDCs) hope to find in it a solution their problems of POVERTY, insecurity, overpopulation, backwardness, illiteracy etc. They consider it a panacea for all the evils of their social and economic life. In fact, the essence of Economic Development of an LDC like India consists essentially in the growth of industrialization.

Realizing the importance of industrialization, once Pt. Jawaharlal Nehru rightly remarked, “Real progress must ultimately depend on industrialization”. His vision was to see India in the group of developed nations of the world and industrialization was the only key to restructure the economy and to achieve sustained growth. Indian economy is a basically an agriculture based economy. It has been evident from the experience of the most of advanced countries that growth based upon agriculture sector will not be sustainable growth.

After studying such behavior of terms of trade they made their belief that for the agriculture based economies terms of trade would always become unfavorable in long run because;

a) The income elasticity of export-goods of agricultural countries is low, while the income elasticity of import-goods is very high. As in case of domestic demand, the demand for agricultural products in other countries, in particular advance countries, is very low. In fact, developed countries have surpluses in agriculture products for exports. As against this, the demand for the import of manufactured goods by LDCs is very intense; and
b) With the advancement of technology, input-output coefficients are declining and most of primary products which were used as raw material are replaced by the industrial cheaper raw material.

On the other hand, if we develop only Tertiary Sector and ignore Industrial Sector then there may be tendency of inflation in the economy and this inflation may lead to deceleration economic growth. Therefore, industrialization is the only method to achieve sustained economic growth. Moreover, economic history demonstrates that to eliminate a country’s techno-economic backwardness it is necessary to develop the industrial sector and then to diversify it over a wide range of area and activities. Industrialization is a process of economic organization characterized by rapid setting up of industries and has invariably been the accompaniment of economic development. Nevertheless, economic development should not be treated synonymous with industrialization because industrialization is only a part of the whole process of economic development.

Some of the major initiatives taken by the government to promote Meghalaya as an investment destination are:

Under budget 2016-17, the State Government proposed allocation of US$ 1.98 million for various art and cultural programs for the development, augmentation and preservation of cultural heritage of the state.
Under budget 2016-17, the state government proposed an allocation of US$ 103.42 million for development of Education sector in the state.
Under the annual budget 2015-16, an investment of US$ 0.29 million has been approved by the Meghalaya State Medicinal Plants Board to increase the production of medicinal plants.
The state government has also proposed an outlay of US$ 32.13 million to improve power supply in the state and associated services, power losses in urban areas, etc., under the Restructured Accelerated Power Development and Reforms Programme.
An investment of US$ 3.98 million was proposed to be invested for the development of roads and bridges in the state and US$ 54.66 million was proposed for the improvement of the agriculture sector of the state under the 12th Five Year Plan (2012-2017).
The state is focusing on developing water harvesting and distribution infrastructure to increase the level of mechanisation in the Horticulture-2/”>Horticulture sector.
Hydroelectric power projects with a total capacity of 687 MW have been proposed to be set up in Meghalaya. All these projects are projected to be operational by 2016-17.
The state government is inviting investments in this area through the PPP mode. Independent power producers (IPPs) are also being invited to develop hydro projects in Meghalaya; this provides immense potential for investment.

Meghalaya is a state in northeastern India. It is the 23rd largest state in India by area and the 29th most populous state. The state is home to a diverse Population of over 3 million people, who speak over 30 different languages. Meghalaya is a landlocked state, and its capital is Shillong.

The economy of Meghalaya is based on agriculture, Forestry, and tourism. The state is also home to a number of small industries, including tea, coffee, and rubber plantations. Meghalaya has a low per capita income, and its economy is one of the least developed in India.

The history of taxation in Meghalaya can be traced back to the British colonial period. During this time, the British imposed a number of taxes on the people of Meghalaya, including a land tax, a head tax, and a salt tax. These taxes were used to finance the British colonial administration in Meghalaya.

After India gained independence from British rule in 1947, the Indian government continued to impose taxes on the people of Meghalaya. These taxes included a central sales tax, an excise duty, and an income tax. These taxes were used to finance the Indian government and to provide essential services to the people of Meghalaya.

The current tax system in Meghalaya is based on the Indian tax system. The Indian tax system is a complex system that includes a number of different taxes, including a central sales tax, an excise duty, an income tax, and a Wealth tax. These taxes are used to finance the Indian government and to provide essential services to the people of India.

The tax system in Meghalaya is administered by the Meghalaya State Tax Department. The department is responsible for collecting taxes, enforcing Tax Laws, and providing taxpayer services.

The government of Meghalaya has implemented a number of tax reforms in recent years. These reforms have been designed to simplify the tax system, reduce the tax burden on businesses and individuals, and improve the efficiency of the tax administration.

One of the most significant tax reforms in Meghalaya was the introduction of the Meghalaya Value Added Tax (VAT) in 2005. The VAT is a consumption tax that is levied on the value added to goods and services at each stage of the production and distribution chain. The VAT has replaced a number of other taxes, including the central sales tax and the state sales tax.

The government of Meghalaya has also implemented a number of other tax reforms, including the introduction of a new income tax regime, the SIMPLIFICATION of the excise duty regime, and the introduction of a new wealth tax regime. These reforms have been designed to simplify the tax system, reduce the tax burden on businesses and individuals, and improve the efficiency of the tax administration.

The tax reforms in Meghalaya have had a number of positive impacts on the state’s economy. The reforms have simplified the tax system, reduced the tax burden on businesses and individuals, and improved the efficiency of the tax administration. These reforms have made it easier for businesses to operate in Meghalaya, and they have also made it easier for individuals to comply with the tax laws.

The tax reforms have also had a positive impact on the state’s revenue collection. The state government has been able to collect more revenue as a result of the reforms. This revenue has been used to finance essential services, such as education, healthcare, and Infrastructure Development.

The tax reforms in Meghalaya have been a success. They have simplified the tax system, reduced the tax burden on businesses and individuals, and improved the efficiency of the tax administration. These reforms have made it easier for businesses to operate in Meghalaya, and they have also made it easier for individuals to comply with the tax laws. The tax reforms have also had a positive impact on the state’s revenue collection. The state government has been able to collect more revenue as a result of the reforms. This revenue has been used to finance essential services, such as education, healthcare, and infrastructure development.

What is the purpose of tax reform?

Tax reform is the process of changing the tax system in order to improve its efficiency, fairness, and simplicity.

What are the goals of tax reform?

The goals of tax reform vary depending on the country or jurisdiction in question. However, some common goals include:

Increasing economic growth
Reducing the deficit or debt
Increasing fairness
Simplicity

What are the different types of tax reform?

There are many different types of tax reform, but some common approaches include:

Base broadening: This involves reducing the number of tax deductions and credits, which can increase tax revenue.
Rate reduction: This involves lowering the tax rates, which can stimulate economic growth.
Simplification: This involves making the tax code simpler and easier to understand, which can reduce compliance costs.

What are the benefits of tax reform?

The benefits of tax reform can vary depending on the specific reforms implemented. However, some potential benefits include:

Increased economic growth: Tax reform can stimulate economic growth by reducing the cost of doing business and increasing investment.
Reduced deficit or debt: Tax reform can reduce the deficit or debt by increasing tax revenue or reducing spending.
Increased fairness: Tax reform can make the tax system more fair by reducing the tax burden on low- and middle-income households.
Simplicity: Tax reform can make the tax code simpler and easier to understand, which can reduce compliance costs.

What are the risks of tax reform?

The risks of tax reform can vary depending on the specific reforms implemented. However, some potential risks include:

Decreased economic growth: Tax reform can decrease economic growth if it is not implemented carefully. For example, if tax rates are lowered too much, it could lead to a decrease in government revenue and an increase in the deficit or debt.
Increased inequality: Tax reform could increase inequality if it is not designed carefully. For example, if tax cuts are targeted at high-income households, it could lead to a decrease in the tax burden on the wealthy and an increase in the tax burden on low- and middle-income households.
Complexity: Tax reform can make the tax code more complex if it is not implemented carefully. For example, if new tax deductions or credits are created, it could make the tax code more difficult to understand and comply with.

What are the challenges of tax reform?

The challenges of tax reform can vary depending on the country or jurisdiction in question. However, some common challenges include:

Political opposition: Tax reform is often politically unpopular, as it can lead to higher taxes for some people or groups.
Technical complexity: Tax reform is often technically complex, as it requires careful consideration of the many different aspects of the tax system.
Implementation challenges: Tax reform can be difficult to implement, as it often requires changes to laws, regulations, and administrative procedures.

What is the future of tax reform?

The future of tax reform is uncertain. However, some potential trends include:

Increased focus on simplicity: In the wake of the 2008 financial crisis, there has been a growing focus on simplifying the tax code. This trend is likely to continue in the future.
Increased use of technology: Technology is increasingly being used to collect taxes and enforce tax laws. This trend is likely to continue in the future, as technology can make tax collection more efficient and effective.
Increased international cooperation: In recent years, there has been a growing focus on international cooperation on tax matters. This trend is likely to continue in the future, as countries seek to ensure that multinational corporations pay their fair share of taxes.

Which of the following is not a type of tax?
(A) Income tax
(B) Sales tax
(C) Property tax
(D) Meghalaya tax
Which of the following is not a goal of economic reform?
(A) To increase economic growth
(B) To reduce poverty
(C) To improve the Environment
(D) To increase taxes
Which of the following is not a benefit of economic reform?
(A) Increased economic growth
(B) Reduced poverty
(C) Improved environment
(D) Increased taxes
Which of the following is not a cost of economic reform?
(A) Job losses
(B) Increased inequality
(C) Environmental damage
(D) Increased taxes
Which of the following is not a factor that can affect the success of economic reform?
(A) The level of government support
(B) The level of public support
(C) The level of international support
(D) The level of Meghalaya tax
Which of the following is not a way to measure the success of economic reform?
(A) Economic growth
(B) Poverty reduction
(C) Environmental improvement
(D) Meghalaya tax revenue
Which of the following is not a challenge to economic reform?
(A) Corruption
(B) Lack of infrastructure
(C) Lack of skilled labor
(D) Meghalaya Tax Evasion
Which of the following is not a policy that can help to address the challenges of economic reform?
(A) Anti-corruption measures
(B) Infrastructure investment
(C) Education and training programs
(D) Meghalaya tax amnesty
Which of the following is not a lesson that can be learned from the experience of economic reform in other countries?
(A) Economic reform is a complex process that takes time
(B) Economic reform can have both positive and negative effects
(C) Economic reform requires strong government support
(D) Meghalaya tax is a key factor in economic success
Which of the following is not a prediction about the future of economic reform in Meghalaya?
(A) Economic reform will continue to be a priority for the government
(B) Economic reform will face challenges from corruption, lack of infrastructure, and lack of skilled labor
(C) Economic reform will have a positive impact on the economy and the lives of the people of Meghalaya
(D) Meghalaya tax will play an important role in economic development