GST, Good and Services tax has brought as one nation, one tax, one market system but its effect on various industries are a little different. GST (Goods and Service Tax) is an indirect tax which takes the place of many indirect taxes. The GST (Goods and Service Tax) was passed in the Parliament on 29th March 2017. The Act came into force on 1st July 2017. The GST (goods and services tax ) is a value-added tax levied on goods and services sold for domestic consumption. The GST is paid by consumers, but it is remitted to the government selling the goods and services through business. GST provides revenue for the government.This rollout has renewed the hope of India’s fiscal reform program and widening the economy. In the Indian economy, service sector contributes over 55 percent. The purpose of introducing GST in India is to reduce the tax burden that’s on both companies and consumers. In the previous tax system there were multiple taxes added at each stage of the supply chain. In the previous system the end cost of the product does not clearly show the real cost of the product and tax how much it was applied. GST included most of the taxes into a one single tax.This tax system has benefited the consumers. As this system reduces the overall costwith the end customer paying less.The Central Government enacted four GST bills:
- Central GST (CGST) Bill
- Integrated GST (IGST) Bill
- Union Territory GST (UTGST) Bill
- The GST (Compensation to States) Bill
Impact of GST on Indian Economy
These are various factors that have impacted Indian economy are:
Increases competitiveness
The retail price of the manufactured goods and services reveals that the total tax factor is around 25-30% of the cost of the product. After implementation of GST the price has gone down as the burden of paying tax has been reduced for consumer of such goods and services. There is a scope to increase production so that competition increases.
GST a simple Tax Structure
Under GST the calculation of taxes is simple instead of multiple taxation under different stages. GST is a the single tax and it saves money and time.
Economic Union of India
After the implementation of GST there is freedom of transportation of goods and services from one state to another. This is easily transportation benefited to all businesses. This encourages production and for businesses to focus on PAN-India operations.
Uniform Tax Regime
GST is a single tax and it made easier for all the taxpayer to pay taxes uniformly. Previously, there were multiple taxes used in every stage of supply chain, where the taxpayer would get confused which was a very big disadvantage.
Greater Tax Revenues
A simple tax structure can bring greater compliance and this increases the number of tax payers which helps in the tax revenues collection for the government. By simplifying structure of taxthe GST has encourage compliance which is also expected to enlarge the tax base.
Increase in Exports
After the implementation of the GST there has been a fall in the cost of production in the domestic market which is a constructive influence to increase the competitiveness towards the international market.
Impact of GST on a Short term
Before the implementation of the GST consumers paid more for goods and services. The main drawback is on the small enterprises who will incur costs in trying to become GST compliant which may result in higher prices of goods.