The new Indian Goods and Services Tax will come into effect today; it will be the country’s largest tax overhaul
The new Indian Goods and Services Tax will come into effect today; it will be the country’s largest tax overhaul to date.
The GST is a ubiquitous indirect tax that replaces taxes levied by the central and state governments.
Under the new system, business owners are faced with the confusing task of navigating the GST’s six tax brackets for goods and services; a good or service’s tax rate depends on how luxurious the good or service is. For example, different tax rates apply to restaurants depending on variables like whether or not the restaurant has air conditioning.
Likewise, the success of the new tax hinges on the GST Network, an online portal that allows businesses to register their companies and file taxes and the central government to track transactions. Business owners are concerned that not enough businesses will sign up to the Network for the tax to be successful, at least at first.
While requiring businesses to file 37 tax returns a year (in each state in which a business operates) is somehow an improvement, the GST is still confusing and might not encourage foreign businesses to move to India in the way that a simpler tax code would.
Delve deeper: India’s GST rollout