GST is the biggest ever tax reform in India founded with the vision of One Nation, One Market, One Tax. GST is the one such step which is expected to provide much-needed restoration of the economic growth in India by eradicating all existing indirect taxes and ensure a free flow of goods and service. India is expected to play a crucial role in the world’s economy in the coming years. Thus the introduction of GST has expected to benefit not only our country but also all the neighbouring countries as well as developed economies of the world.
The idea behind introducing GST across 29 states and 7 union territories in India would be an added advantage for everyone by adopting a neutral situation. GST would benefit the traders and manufacturers with fewer tax filings, transparent rules, ease in bookkeeping, consumers would be paying less for the goods and services and it would also benefit the government in generating revenues and preventing leakages.
Ø Benefits of GST to the Indian Economy:
1) Removal of all types of indirect taxes such as Vat, CST, Service tax, Excise as GST has subsumed all types of indirect taxes except Customs.
2) Fewer Tax Compliances with the simplified tax structure.
3) Removal of Cascading Effect.
4) The reduction of the manufacturing cost will enable a lower burden to the consumers.
5) An increase in demand and supply of goods, an increase in demand will lead to an increase in supply which will help in the increase in the production.
6) Control on Black money circulation due to mandatory checks.
7) Boost to the Indian economy in the long run.
8) The lower burden on the consumer as the consumer will pay the same price on the same product
Ø Impact of the GST on Indian Economy:
1) The introduction of GST has reduced the burden on producers and manufacturers which will enable them to grow through more production. As per the earlier law which included certain tax clauses which prevented the manufacturers from producing the goods up to their optimum capacity which indirectly retarded growth. Thus GST has taken care of this problem by providing a tax credit to the manufacturer.
2) Different tax barriers such as octroi or any other taxes are eradicated which led to wastage of unpreserved items while transportation. These penalties led to major costs due to the need for buffer stock and warehousing facilities. Thus GST will have eliminated all these taxes and introduced a single taxation system.
3) There will be transparency in the taxation system as the customers will be aware of how much taxes are paid by them.
4) GST will provide the credit of the taxes paid on purchases which will encourage the manufacturers and producers to purchase the raw material or goods from a registered dealer in order to claim the credit.
Ø Future under GST Regime:
1) Talking about the impact of GST on the future of the Indian economy, there are) various long term benefits which are expected that GST would bring would be a lower rate of taxes, minimized GST rates.
2) Countries that have adopted GST have experienced reform in their economy by applying 2 to 3 rates one being the lower rate for essential commodities and one being the higher rate for luxurious items.
3) Currently, in India, we have adopted 5 slabs with as many as 3 rates namely Integrated GST, Central GST and State GST. In addition to the above cess is also levied in some cases.
4) However, there can be changes in these rates subject to government decision and until we have reached a Revenue Neutral Rate.
5) The introduction of GST will also improve the market for Indian products competitive in the domestic and international markets.
6) Lastly, GST has led to transparency which will also easy to administer
Thus implementation of GST is the government’s responsibility to address the capacity of the participants such as small scale dealers, traders, and manufacturers. The government is also working on ways to reduce the overall compliance cost and the necessary changes have been made as per the requirement of the masses. Thus GST will lead to a booster in sustaining the growth of the Indian economy.