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GST or the Goods and Services Tax is the recent modification to the tax regime followed in India. This particular amendment to the taxation laws has been introduced via the Constitution (One Hundred and First Amendment) Act 2016. The Goods and Services Tax would be governed by the GST Council whose chairman would be the Union Finance Minister of the Indian Republic. Let’s have a look at the impact on GST on Agricultural Sector.
The introduction of Goods and Services Tax is considered to be a reform in the scheme of indirect taxation followed by India. India has been following a federal structure where certain rights and responsibilities are assigned to the states and the rest of the rights and responsibilities have been reserved by the centre. Indirect taxes happened to be a state subject. Therefore the states had the sole rights to fix the tax limits for various services and goods within the boundaries of the state. This made the taxation structure highly non-uniform across the country. Further, this also led to multiple taxations across states.
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The GST regime seeks to unify all of the states of the largest democracy of the world at least in terms of the indirect taxes paid by the people residing in the country. While previously each individual state of this huge democracy had their discretion in terms of fixing the percentage of taxes for each service, goods, and commodity; under the GST regime, several central and state taxes have been amalgamated into one single tax. This single tax system would lead to easier enforcement and administration of the tax system apart from reducing multiple taxing for the consumers. This would also enable free movement of goods and services from one state to the other while reducing overall paperwork.
India is primarily an agriculture-based society. This agrarian society is one of the largest contributors to the Indian GDP (Gross Domestic Product). It is estimated that more than 58 per cent of the rural household depends on the agriculture sector for earning their livelihood. The definition of agriculture includes the breeding and cultivation of plants, animals, and fungi for the purpose of food, medicine, clothing, fuel, and other allied purposes. Therefore, the agriculture sector not only includes merely farming, horticulture or animal breeding. The agriculture sector includes everything under agriculture including the allied sectors such as forestry and fisheries.
The overall impact of GST is foreseen to be positive for almost all of the sectors including the agriculture sector. The agriculture sector contributes more than 15 per cent of Indian Gross Domestic Product. This is among the largest contributing sectors of India’s economy.
Some of the positive indicators for the agriculture sector due to the implementation of GST include:
Challenges due to the Impact of GST on the Agricultural Sector
Changes are often resisted and such resistance arises because of the challenges faced while implementing the change or the struggle of coming out of the comfort zone during the process of change. Some of the changes, which are being pre-empted while implementing GST specifically in the Agricultural Sector include:
As per experts the impact of GST on agricultural sector would be positive however, it should not cause us to ignore the challenges and steps must be taken to address those.
Read our article:Composition scheme under GST & Presumptive Taxation Scheme
Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.
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