Goods & Service Tax And Its Impact on Service Sector of India

When I had first read about the concept of GST and the need of it, almost a decade ago, I was actually shocked because the phenomenon of double taxation looked highly unjustified (and encouraged evasion/corruption), and it was so surprising that despite several decades of independence, no leader had even thought of fixing it. To give a simple analogy, it’s like as if a tap in the house is open and water is getting wasted, but nobody wants to close the tap.

Why? Because there are so many underlying vested interests involved who want the tap to keep leaking. Right from industrialists, to politicians & even the underworld. Hence, no leader had the guts to fix it, nor even think about it. Vajpayee was the first leader who thought of tackling it, but within an year of forming the committee, he had stepped down, and the plan, as expected, was carefully swept under the carpet for a decade by the G family when Congress was in power.

Fortunately, now, Vajpayee’s karma yogi successor, PM Modi, has fulfilled it. He has fixed something which looked so obvious & unjustified, but nobody wanted to fix it before, due to the complex network of vested interested involved in it. Today, we have thrown off the shackles and we are about to witness the dawn of a new era. Our gratitude to Vajpayee for conceptualizing, best wishes to Modi for heralding this new era, and congratulations to Indians for becoming a part of a New India. My two cents worth on GSTGST explained for dummies like me.

GST is a tax on consumption the only person in the chain who cannot recover – it is the end user that is usually the common man, now when you buy pani puri and paan you will end up with GST but the corporate sector and the Bussinessman recovers it it all what they have paid the only portion they pay is their value addition. Actually the big business will recover 70% of the GST as they pay out to manufacture but value addition is all added up along the supply chain it ends up being paid gross by the consumer who has no recovery course. It is a huge indirect taxation but the outsourcing companies in India providing eCommerce Services, Data Entry Services Companies and other technical support won’t be impacted much. You are paying it all the end user.

This is the most punitive form of taxation as poor pick up the bill. The entire GDP is now taxed and that value addition on each stage is divided and recovered gross over 1.2 billion people. As Adani and Ambani I will do well as I recover all GST even on my corporate jet.

It is a direct consumption tax on 1.2 billion people. Stop defining it as anything else. The full brunt of the tax is taken up by the poorest man. They cannot recover even the paan wala recovers only part of it. Yes it will bring a lot more revenue. Demonisation plus GST has made Indian economy totally digital but also prone to lot of cash transactions. You will observe it soon. The paanwalla and channay wala will ideally like to discount than to print a receipt. Human nature regrettably !! The allo chanay wala dahi badday wala adli wala kebab aala who makes roaring cash sale will definitely be less inclined to issue a GST receipt as they know they will end up declaring their entire income for revenue to tax him. GST ties and bring people into inconsistent tax net. They therefore avoid GST to avoid Income tax. ( Please be kind to the poor reri walas and don’t report them – it takes time for them to learn taxation plus will you or Zfb report Ambani – be kind to poor )

@ It will bring a lot of people under tax ambit… Currently only 3% of India is bearing the burden of it…

Yes definitely but the 750 million poor are now taxed please for all the value addition along the supply chain. This is quite a burden in my humble opinion.

Leave a Reply

Your email address will not be published. Required fields are marked *