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Effect of Goods and Service Tax (GST) On Indian Economy
Effect of Goods and Service Tax (GST) On Indian Economy
INTRODUCTION
Goods and service tax (GST) IS a full tax charge on manufacture, sales and
expenditure of goods and commerce, fundamental aim of GST is to make uniform
the scattered indirect tax system in India and avoid the cascading effect in
taxation. GST is termed as biggest tax reform in Indian tax structure. It will not be
an additional tax, it will include central excise duty, service tax additional duties
of customers at the central level, VAT , central sales tax entertainment tax, state
surcharge, luxury tax, lottery tax and other surcharge on supply of goods and
services. The purpose of GST is to replace all these taxes within single
comprehensive tax, bringing it all in single umbrella.
IMPACT OF GST
1. Increases competitiveness
The retail price of manufactured goods and services in India reveals that the total
tax component is around 25 to 30% of the cost of the product. After the
implementation of GST the prices have gone down, the burden of tax has been
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There is freedom transportation of goods and services from one state to another
after GST. Goods can be easily transported in all over the country, which is benefit
to all business. This encourages increase in production and for businesses to focus
on PAN-India operations.
A simple tax structure can bring about greater compliance, this increase the no. of
tax payers and in turn the tax revenues collected for the government. By
simplifying structures, GST would encourage compliance, which is also expected
to widen tax base.
5. Increase in exports
There has been a fall in the cost of production in the domestic market after the
introduction of GST, which is a positive influence to increase a competitiveness
towards the international market.
CHALLENGES
To keep a check on the rates of GST. If the rates of GST are over 15%, then the
goods would be costlier.
A separate law must be drafted.
Constitutional amendments to enable levy of GST on imports.
CONCLUSION
REFERENCE:
https://www.hrblock.in/earlygst/impact-gst-indian-economy/