With the economic crisis hitting the globe in every sector, India stands tall by posing a beacon of hope through a bunch of strategic undertakings that would only target ambitious growth in the years to come.
The Goods and Services Tax (GST), an iconic step taken by the Indian government, will fundamentally act as a catalyst in bringing about a dynamic stimulation to the entire economic sector.
The introduction of GST has eradicated the cascading effect of taxes on the Indian economy as a whole, thereby playing a pivotal role in pulling through the challenging times that the economy has faced.
GST – An Overview
GST is a solo tax levied on the supply of goods and services right from the manufacturer to the end consumer. This attempt has converted India into a unified common market by simplifying the indirect tax system.
GST is expected to boost the GDP (Gross Domestic Product) of the country and also accelerate its economic growth. In fact, it has been anticipated by experts that GST would increase this growth to the tune of 1-2% while the inflation rate would get crammed by 2%.
Benefits Of GST To An Economy Like India
Let us look closely at this revolutionary GST tax bill to understand better how it has proved to be beneficial not just to India, but also within neighbouring countries and other developed economies across the globe.
The introduction of gstn has brought about the following landmark changes to the Indian economy as a whole:
- Bundled indirect taxes such as CST, VST, CAD, SAD, Service tax, etc. have been removed.
- GST has played an active role in simplifying the tax policy by making it less compliant and complicated.
- The cascading effect of the tax, also known as a tax on tax, has been removed.
- The burden of tax on the manufacturing sector has reduced, which in turn would help reduce the manufacturing cost of goods.
- The burden on the common man has automatically reduced due to the above point as they have to spend a lesser amount to purchase the same product.
- The demand and consumption of goods have increased, which in turn has led to an increase in the supply of goods.
- A mandatory check has been put to control black money circulation amongst traders and shopkeepers.
Impact Of GST On The Economy As A Whole
The overall impact of GST on the economic growth of India, or any other nation for that matter, can be listed hereunder:
- The tax burden on manufacturers is reduced, this fosters growth through more production, unlike the previous taxation structure that prevented manufacturers from producing at their optimum capacity and thereby retarded their growth.
- Myriad tax barriers like toll plazas and check posts curb the transportation of unpreserved goods, thereby leading to wastage. This, in turn, leads to higher costs when buffering and warehousing stock. The single tax structure of GST can cut through this roadblock.
- The gst online registration system of paying a single tax has brought about more transparency in the tax system as customers can easily calculate the exact amount of tax being charged and on what basis.
- GST extends the tax base and adds to the government revenues
- GST offers credit for the taxes paid by producers in the goods and services chain. This encourages producers to buy raw materials from more registered dealers who would also come under the purview of taxation.
- GST eliminates the custom duty on exports. With lower costs of the transaction, the competitiveness of the nation in foreign markets will increase.
GST has come across as a very noteworthy step for the economic development of India. It is an indirect national tax reform that has eased off double taxation and made taxation easy for the industries. It has even made Indian products competitive in the domestic as well as international market.
With a transparent character, GST is much easier to administer. This uniform tax system would boost trade, commerce, and export and would also take the nation to greater heights of economic success on the global market front.
Hence, it would not be incorrect to claim that GST has been a commendable effort introduced by the government and, in the long run, it would bring about a win-win situation for one and all.