Overview and Benefits of The Goods and Services Tax (GST) in India

GST Bill: An Overview

It was during the announcement of the Union Budget 2007-08 when the then Finance Minister, Mr. P. Chidambaram, first introduced the concept of GST or Good and Services Tax in India. It was proposed to roll out with the start of the 2010 financial year, i.e., 1st April 2010; however, the GST bill in India got delayed and would now be in official application from 1st July 2017. GST would be one of the most revolutionary steps taken by the Indian government to reform the indirect taxation in the country since 1991.

In India, presently, there are a number of taxes levied individually by the central as well as the state government which gives rise to the problem of cascading or double taxation. In this current dual taxation system, the Union or Centre levies taxes on the manufacture of goods while the State levies and collects tax on the sale of goods. GST would mitigate this problem by subsuming all the central and state taxes into one. GST in India would be drafted as the 122nd Constitution Amendment Bill which would subsume all the taxes under three categories i.e., Central GST or CGST, State GST or SGST and Integrated GST or IGST.

Benefits Of GST Bill In India

Less than 3 months are left for the GST bill to be finally applicable in India and people are still unaware of the many benefits that GST would bring to the Indians and the Indian Economy.

Mitigation Of Dual Taxation Or Cascading Effect: Dual Taxation is one of the many problems prevailing in the Indian economy and with the application of GST, this problem would be zeroed down. Because of the availability of Input Tax Credit, as a part of GST, the cascading effect at every point from production to sale would also be reduced to a minimum.

Boost To ‘Make in India’: Indian Government launched the ‘Make In India’ campaign to boost the production of goods and services within India. GST would amalgamate the various taxes into one thus attracting more industries towards the country for business. The uniform IGST levied on imports would also be of great help to boost ‘Make In India’.

Boost To Import Export: Import Export in India would be greatly affected because of the passing of GST bill in India. GST would reduce the confusion created by a number of taxes that were otherwise levied on import and export of goods and services. It would also minimize the hidden taxes that were collected on export individually by the State as well as the Central Government.

Increased Foreign Investment: With the reduction in indirect taxes and the rolling out of GST rates in India, it would attract more Foreign Investment to the country and add to FDI. India would become a common market with common tax rates and procedure, thus erasing the economic barrier to foreign investment.

Transparency In Indirect Tax: Indirect tax is levied individually by Sate and Central Government under various sections like Excise, Service Tax, Customs Duty, VAT/CST, Entry Tax, Lottery Tax etc. GST would be an amalgamation of all these taxes as CGST, SGST, and IGST and therefore would bring more transparency in the indirect form of taxation.

Ease Of Doing Business: With almost all the taxes amalgamated into one and India becoming a more common market with a common tax system. Businesses would not have to pay extra taxes individually to the State and Central Government at various steps of production to the sale of goods and services.

Moreover, that main benefit offered by the Goods and Services Tax in India would be the reduction in the price of goods and services in India. This serves to be one of the main GST features that it would decrease the indirect taxes otherwise levied on various goods and services purchased by the consumers. The end consumers of goods and services would benefit greatly through GST roll-out because of the reduced prices. This was all about GST in India, let’s patiently wait for July 1st when GST would be officially applicable in India and see what this indirect tax reform would actually have in store for the people.

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