Impact and Benefits

The Goods and Services Tax or GST go live on July 1, 2017, but the process of consolidation and enrollment has already begun. Aiming to standardize indirect taxation in the country as far as goods and services are concerned, the GST will have a multi-fold and direct impact on the workings of businesses, whether large corporate houses or SMEs.

Impact of GST on the Indian economy

Listed below are some impacts of the implementation of the GST that will benefit the Indian economy.

Simple Tax Structure

GST has simplified the taxation system of the country. As GST is a single tax, calculating tax at the multiple stages of the supply chain has become easier. A simple taxation regime can make the manufacturing sector more competitive and save both money and time. It also unites the taxation laws under various state governments.

Increase in Competitiveness

The retail price of the manufactured goods and services in India reveals that the total tax component is around 25-30% of the cost of the product. After implementation of the GST, the prices have gone down, GST will effectively mean that the tax paid by the final consumer will come down in most cases and will help in boosting consumption, which is again beneficial to companies.

Increase in Exports

The cost of production in the domestic markets has dropped due to the implementation of the Goods and Services Tax. which is a positive influence to increase the competitiveness towards the international market. This helps well for exporters, who compete with global manufacturers, which operate on very different cost structures.

Economic Union of India:

The GST impact on the transportation of goods and services from state to another has been a very welcoming change. Goods can be easily transported all over the country, which is a benefit to all businesses. This encourages an increase in production and for businesses to focus on PAN- India operations.

Greater Tax Revenues:

A simpler tax structure can bring about greater compliance, this increases the number of taxpayers and in turn the tax revenues collected for the government. By simplifying structures, GST would encourage compliance, which is also expected to widen the tax base.

Uniform Tax Regime:

GST being a single tax, it has made it easier for the taxpayer to pay taxes uniformly. This provides a fair play ground for all stakeholders and focus can be brought in to efficiency rather than vantage points.

Types of GST are as follows:

1.SGST (State Goods and Services Tax):

The state government collects this tax based on the intrastate supply of services and products.

2. CGST (Central Goods and Services Tax):

The tax is collected by the central government on the intrastate sale of goods and services.

3.IGST (Integrated Goods and Services Tax):

The tax is charged on the supply of products and services between two states. The taxes are shared between the central and state governments.

Benefits of GST in Indian Economy:

For Citizens:

For Trade/Industry: