According to the dictionary, meaning monitoring means to supervise activities in progress to ensure whether the objectives and the targets are met. Price-Monitoring means to observe and check the prices over the duration of time and to keep a systematic review of the pricing.
GST is a bill passed by the parliament to remove the various indirect taxes like VAT, and other taxes and to subsume it into a unified tax structure. This benefits the country in having a streamlined tax collection process that is less time-consuming and more efficient.
The business owners and working professionals now benefit from tax relief provided to them under GST based on different qualifying criteria.
In addition, working professionals and business owners must get their GST Registration done to get the GST number if they have not applied for the same.
A price monitoring structure has been proposed by the government under the GST regime to ensure various benefits of the reforms or changes in any unjustified price disturbance.
With the effects of the bill, it tends to provide a push or boost to the economy. The GST is expected to put in place latest by April 1st, 2017, where taxes on goods are expected to fall sharply after its effect.
The GST regime is undoubtedly the biggest tax reform post-independence. The main aim of the bill is to remove or eradicate all the unnecessary or indirect taxes into a unified tax structure, which would result in a sharp decline in logistics and taxes as well.
Keeping in consideration the federal structure of the country must work flawlessly. The center and the state will collect the GST. The tax collected by the center is called CGST and taxes collected by the state are called SGST.
There are some similarities and differences between the CGST and SGST's in individual states. The CGST and SGST are applied on products, goods, and services on the destination principle. Thus, making the exports will become zero-rated and the imports will attract tax in the same manner.
As far as the interstate trade of goods and services is concerned this will attract an Integrated GST. A price monitoring structure without sufficient legislative backup may from the legislature be ineffective and an additional compliance shall necessarily be imposed.
The government does not want any increase in price or inflation after the implementation of the GST, so it does not ensure its effectiveness without the proper backing of the legislature. This could lead to intricate paper works and it shall ensure that the GST rate is feasible enough thus making a smooth credit system.
It is evident that after the implementation of the GST, regimes in many countries have actually added up inflation and by the price, monitoring structure the government expects to avoid a similar situation by lowering the tax rate.
By the price monitoring mechanism, the government tends to abstain frequent dabbling of rates to make a steep specific sector.
It would be more suitable if the GST rates were lowered in the beginning.
This would definitely make sense due to the variation in VAT across the country. It has also been said that the center will compensate for any revenue loss for five years post GST implementation.
The price monitoring includes the standardization of rates along with levying on goods. The GDP of 2% increase is expected and any other benefits are expected. The price monitoring structure of the government tends to remove the doubts on whether it would result in negative impacts or not.
The structure ensures that there is no downside of the bill and with proper implementation and the backing of the central government. It is expected to bring a positive impact of the implementation of the bill.
A price mechanism is necessary and many are of the opinion that it is better to have multiple rates as a large part of the economy.
This is similar to the EU where VAT rates change across the states, keeping a SOP to the minimum tax base would lower the rate of GST.
A wider tax base gives a wider scope to lower the rate of GST that allows credit for input taxes that are paid across the value chain, which would result in efficiency, and overcast the retail prices as well.