GST in India?
GST – Goods & Services Tax in India is the latest buzz word which is booming in the Indian tax administration & it is one of the fundamental things that has grasped the attention of the market which is giving its indications on the earning of the companies. GST in India has been conceptualized as a more efferent tax system, unbiased in its function and engaging in dissemination.
GST has revolutionized India into one undivided common market, which will in return lead to reduced processes of running businesses and make huge savings in logistics cost.
GST in India has upgraded the commercial merger of India & it will assist in better conformity and wealth flexibility as it will bypass the descend effect in Indirect tax administration.
It would have a dual edge effect as – some firms may earn a profit as the GST rate which will be lower than their present tax rates; on the other hand, some firms may suffer as the GST rate which will be higher than their present tax rates.
There are multiple numbers of advantages lined-up for GST in India such as:
- Elimination of Multiple Taxes: Implementation of GST will result in the elimination of several taxes such as central excise duty, service tax, VAT, luxury tax, central sales tax, and more. This would help avert the cascading effect of the tax on tax and lead to a simpler and uniform way of taxation. It would prove beneficial for the tech industry as it would lead to deeper infiltration of digital services across India.
- Removal of overflow effect: A system of logical tax credit throughout the value chain, & across the perimeter of states would ensure that there is a minimal overflow of taxes. This will minimize the hidden cost of the doing business.
- Increase in Savings: Firms would be able to generate huge savings for themselves as their logistics and distribution costs would fall substantially. This would occur since companies would no longer need to maintain multiple sales depots. FMCG companies presently pay around 25% in excise duty, VAT and entry tax which may reduce to 18% after GST rollout leading to substantial savings.
- Creation of a Single, Uniform Market: A single, unified market would help in free movement of goods in the country which would benefit businesses in supplying their products in an unrestrictive manner.
- Improved competitiveness: Reduction in transaction costs of doing business would eventually lead to an improved competitiveness for the trade & industry.
- Drop in Prices: According to a report by Motilal Oswal Securities, execution of GST in India would result in minimization of prices of automobiles by 8%. This would increase to higher sales as more consumers would feel incentivized to purchase the vehicles. Apart from vehicle prices, prices of mobile handsets will also see a drop. Handset manufacturers will likely pass on the cost benefits to consumers as they would no longer need to maintain state-specific warehouses for keeping sufficient stock.
- Increased revenues: Due to the elimination of multiple taxes, a single uniform tax would benefit the suppliers and encourage them to pay tax as they can claim input tax credit for their purchases. Plus, this would lead to curbing of tax evasion hence, more revenues for the Government.
Here, we have enumerated a few positives points of GST in India and how it will affect our economy post in its implementation. It is a decisive economic reform that will become a part of India’s modern economic history. GST in India will benefit all the major sections of the Indian economy and pave the way for the country towards becoming an economic barrage.
GST in India is one of the indirect tax which is nowadays prevailing in the market & it will surely make India one of the undivided common market. This tax is levied by the central & state government. GST in India is being set to replace several indirect taxes in the economy VAT, Service tax, CST, CAD etc. there are also several benefits lined-up on the introduction of the GST such as the elimination of multiple taxes, removal of overflow effect, drop in prices, improved competitiveness & much more. Effect of GST on India Economy will benefit all the major sections of the Indian economy and pave the way for the country towards becoming an economic barrage.