GST will be very helpful in boosting Indian economy. It will definitely act as the booster for the Indian economy. It will be helpful for our nation to increase GDP. With the implementation of GST, the overall economy has strengthened by far and India’s economy accelerated to 7.7% in the three months ended 31st March. These future aspects show the substantial increase in economic growth.
GST Will Remove Cascading Effect
In the present scenario, there were different types of taxes levied like service tax, VAT, Excise etc. In GST regime there is a single tax GST merging all types of taxes into one. The tax will be charged on value addition only. This will lead to lower down the cost of products and services. After the introduction of GST law, the customer is now able to know that what is the actual tax he is paying for the product or services.
In existing taxation law, more than one taxes are levied on many goods and services and they were not even mentioned in the invoices many times so customers are not able to know that what is the actual amount they were paying as taxes.
Preventing Tax Evasion
- In GST law the tax evasion will be prevented to the great extent as monthly return recording sales are filed in form of GSTR-1 and GSTR-3B and purchases are recorded in GSTR-2A of person.
- The problem of ITC mismatch will also be prevented.
- It will prevent black money accumulation which will lead to more revenue collection for the government.
- More revenue collection to the government will definitely lead to infrastructure development in many backward states.
- Which in turn will attract more industries to the country and will help our economy to grow and develop?
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Wider Tax Credit Availability
In the existing indirect tax system, the credit for CST cannot be taken. Similarly, service tax credit cannot be used for paying tax like VAT etc. So in GST law, there will be single tax levy so credit can be easily availed.
International Tax Competencies
- After the introduction of GST, Indirect taxation of our country will be competent in the international market.
- This tax reform will also make our country become one of the preferred destinations for the investment purpose for big investors.
- New investments will lead to developing our economy as it will also provide for new employment opportunities.
Sectors like media, telecom, automobile etc. have been boosted. Due to the elimination of the cascading effect of taxes, the cost has reduced eventually.
Manufacturers are not passing on the benefit of cost reduction to the consumers. For media sector, GST will prove to be so much fruitful as will be able to take input credit of service tax paid by them. This will ultimately result in overall cost reduction.
Earlier, there is the tax rate on automobile industry which is around 30 to 45 per cent. After GST law the rate is around 18 per cent and there is a reduction in logistics cost also. So in long run, the automobile industry will be benefited to a great extent.
Due to overall tax savings, the cement industry will also get a boost as overall tax rate has decreased since the introduction of GST. Due to the introduction of the single rate the process to administer tax will also become simplify. Compliance cost will also get reduced.
As India is a developing country, here the main important problem is poor infrastructure that’s why the development rate of businesses are also slow. For increasing the better facility for infrastructure the new tax reform will help them.
Corruption will also get reduced as under the existing system there were multiple tax levies by many different authorities like checkpoints between interstate borders. So this corruption practice has been eliminated due to nation wide single tax applicability.
