Benefits of GST in India

Introduction of GST would be a very significant step in the field of indirect tax reforms in India. By amalgamating a large number of Central and State taxes into a single tax and allowing set-off of prior-stage taxes, it would mitigate the ill effects of cascading and pave the way for a common national market. For the consumers, the biggest gain would be in terms of a reduction in the overall tax burden on goods, which is currently estimated at 25%-30%. Introduction of GST would also make our products competitive in the domestic and international markets. Studies show that this would instantly spur economic growth. There may also be revenue gain for the Centre and the States due to widening of the tax base, increase in trade volumes and improved tax compliance. Last but not the least, this tax, because of its transparent character, would be easier to administer.

Benefits of GST 

Benefits For business and industry

Easy compliance: A robust and comprehensive IT  system would be the foundation of the GST regime in  India. Therefore, all tax payer services such as  registrations, returns, payments, etc. would be available  to the taxpayers online, which would make compliance  easy and transparent.

Uniformity of tax rates and structures: GST will  ensure that indirect tax rates and structures are common  across the country, thereby increasing certainty and ease  of doing business. In other words, GST would make doing  business in the country tax neutral, irrespective of the  choice of place of doing business.

Removal of cascading: A system of seamless tax- credits throughout the value-chain, and across  boundaries of States, would ensure that there is minimal  cascading of taxes. This would reduce hidden costs of  doing business.

Improved competitiveness: Reduction in  transaction costs of doing business would eventually lead  to an improved competitiveness for the trade and  industry.

Gain to manufacturers and exporters: The  subsuming of major Central and State taxes in GST,  complete and comprehensive set-off of input goods and  services and phasing out of Central Sales Tax (CST)  would reduce the cost of locally manufactured goods and  services. This will increase the competitiveness of Indian  goods and services in the international market and give boost to Indian exports. The uniformity in tax rates and procedures across the country will also go a long way in  reducing the compliance cost.

Benefits For Central and State Governments

Simple and easy to administer: Multiple indirect  taxes at the Central and State levels are being replaced  by GST. Backed with a robust end-to-end IT system, GST  would be simpler and easier to administer than all other  indirect taxes of the Centre and State levied so far.

Better controls on leakage: GST will result in better  tax compliance due to a robust IT infrastructure. Due to  the seamless transfer of input tax credit from one stage  to another in the chain of value addition, there is an in- built mechanism in the design of GST that would  incentivize tax compliance by traders.

Higher revenue efficiency: GST is expected to  decrease the cost of collection of tax revenues of the  Government, and will therefore, lead to higher revenue  efficiency.

Benefits For the consumer  

Single and transparent tax proportionate to the  value of goods and services: Due to multiple indirect  taxes being levied by the Centre and State, with  incomplete or no input tax credits available at progressive  stages of value addition, the cost of most goods and  services in the country today are laden with many hidden  taxes. Under GST, there would be only one tax from the  manufacturer to the consumer, leading to transparency  of taxes paid to the final consumer.

Relief in overall tax burden: Because of efficiency  gains and prevention of leakages, the overall tax burden  on most commodities will come down, which will benefit  consumers.

1 thought on “Benefits of GST in India

Leave a Reply

Your email address will not be published. Required fields are marked *