Impact of GST on Centre-State Relations in India in Financial Terms

Abstract

This paper analysis of what the impact of Goods and Service Tax or GST is all set to be a game changer for the Indian economy. The waiting period is over on 8th September 2016 with the consent of the President to the Constitution (101stAmendment) Act 2016. The successful passing of the amendment has cemented the ways for introduction of the GST in the country. It would instantly enable the Union to exact expense on the offer of merchandise which has been in the space of the states, and the states correspondingly would have the capacity to demand assess on administrations which as of recently was generally in the area of the Union government. In this paper an attempt is made to study GST model with reference to central and state relations in financial terms.

GST in India is expected to be a destination based consumption based levy. GST stands for “Goods and Services Tax”, and is proposed to be a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level. Therefore it becomes essential to restructure the business and location depending upon the assessment of implication of GST on each type of transactions. The impact analysis and planning for restructuring can be done only after the draft law is released. Introduction of GST should thus rationalize tax content in product price, enhance the ability of companies to compete globally, and possibly trickle down to benefit the ultimate consumer. Since the dual GST is considerably different from the present indirect tax regime, a massive training initiative would be required at both federal and State levels to familiarize the respective administrations with the concepts and procedures of the dual GST.

Keywords: GST, CGST, SGST, IGST, Centre- state, Input Tax Credit