With the Goods and Services Tax (GST), the unified nationwide tax system, coming into effect from Friday midnight, ‘Express’ looks at how Kerala Government will benefit from the new tax regime. Though the costs for a range of services will become dearer, for the cash-strapped state government, GST is expected to bring a windfall. These are the principal reasons.
There will be electronic filing for all sales and purchases. If the seller wants to claim input tax credit (paying lower tax on the product sold by deducting the tax paid for the input costs), he needs to ensure the retailer also files the purchase at his end. “This will bring transparency, and the tax department will know tax evasion as the entire process is done electronically. The GST Act has incorporated severe punishment for tax evasion,” said P J Johny, FCA, a tax expert.
Since the registration number in GST will be PAN-based turnover, there will be more financial discipline and higher compliance, resulting in higher tax mop-up.
The corporates will deal only with registered traders as they need to file all the details of their trades electronically. This is expected to trigger a rush for all the unregistered traders to register and ensure they do not lose business. Again, as more traders come into the tax system, it means more revenue to the government coffers.
Since we are a services-consumer state, the state government will benefit from the hike in the services tax from 15 to 18 per cent.
Till now, Malayalees who buy marble from Rajasthan or electrical goods from Delhi had to pay tax in those respective states. The GST will replace the Integrated Goods and Services Tax. Under the new structure, there will be revenue sharing between the origin state and the destination state at the ratio of about 50:50. This is also expected to boost the state’s revenue.
Malayalees will have to pay three per cent tax extra. There will be a 20 per cent hike in service tax rates. Due to the overall hike in services tax, family budget will rise 5-10 per cent.
P J Johny, FCA and an expert of GST
No doubt, consumers will benefit. But to get the benefit, a proper monitoring and billing system should be set in place. To reap the benefits, the entire process needs to be streamlined.
- Biju Priyadarshan, Police Training College, Thiruvananthapuram
Apart from essential items, decreased prices of kitchenware and appliances will be good. It will reflect in the family budget. Need to wait and watch how it’s implemented and what the benefits will be.
- Reena, Junior Superintendent, ITI
It won’t bring a significant change in the family budget. It seems to be beneficial for the government since all transactions will be more transparent. General public has no clear picture about what GST means.
-Vishnu V K and Divya Jyothi, techies
Medical expenses have become unbearable. Both me and my wife require regular treatment for old age-related ailments. For that, an average of Rs 5,000 per month is required. If hospital bills soar as a result of GST, we won’t be able to afford it.
-J Vidyadaran, a retired Fire and Rescue Services officer