New Delhi, May 20: On July 1, the Goods and Services Tax regime will kick-start across the country. The announcement was made by Union Finance Minister Arun Jaitley at the two-day-long meeting of the GST Council that ended in Srinagar, Jammu and Kashmir on Friday. Jaitley said, "Most services exempted from the tax will continue to be exempted under the GST."
With the GST, India will join select league of nations with a goods and service tax. In fact, France was the first country to implement the GST in 1954. Since then, Germany, Italy, the UK, South Korea, Japan, Canada and Australia have been among the over a dozen nations which have implemented the GST.
China implemented GST in 1994 while Russia did it in 1991. Saudi Arabia plans to do it in 2018.
The GST Council finalised tax rates on 80-90 percent of goods and services under the four-slab structure with essential items of daily use being kept in the lowest bracket of 5 percent.
The GST will be a national sales tax that will be levied on consumption of goods or use of services.
It will replace 16 current levies -- seven central taxes like excise duty and service tax and nine state taxes like Value Added Tax and entertainment tax -- thereby creating India as one market with one tax rate.
Last week, the Reserve Bank called the GST a "game changer" and said given the cross-country experience and empirical evidence on efficiency gains from the VAT in the Indian context, the implementation of this comprehensive indirect tax is likely to ensure higher tax buoyancy and an improvement in government finances over the medium term.
The GST is a destination-based single tax on the supply of goods and services from the manufacturer to the consumer and is one indirect tax for the entire country.