Advantages on Implementation of GST, Benefits for Implement GST
1. Economic Integration and GDP Growth:
It is expected that the introduction of GST will increase the tax base but lowers down the effective tax rates and will also remove the multiple point taxation. This will lead to higher amount of revenue to both the States and Union. Uniform GST across the Country will make India a common market and it will expand trade and commerce, increase export and will accelerate economic growth. GST is expected to bring economic integration in the Country and will boost GDP growth, bringing down the fiscal deficit.
2. Cascading Effect of Indirect Taxes
Amalgamating several Central and State Governments Taxes into a single tax would mitigate cascading or double taxation. GST will remove cascading effect of taxes embedded seamless from cost of goods and services and will provide seamless credit throughout value chain. This will significantly reduce cost of indigenous goods.
3. Promote ‘MAKE IN INDIA’ Concept:
‘Make in India’ has many obstacles in its pathway, the key indirect tax reform that would go a long way in promoting the ‘Make in India’ concept. One such obstacle is ‘cascades’ of tax on tax. Because of the GST tax structure, most of the obstacles of indirect taxes will resolve and worldwide corporates will infuse more money in ‘Make in India’ concept and India will gain in business to China and Asian Counterparts. ‘Make in India’ is an important initiative to promote manufacturing and generate employment subject to successful implementation of fiscal setup both at Centre and States and GST is one such important fiscal setup. Therefore, GST will promote “Make in India” concept of Central Government.
4. Reduce Cost of Tax Compliance:
Integration of existing multiple taxes into single simplified GST tax will significantly reduce cost of tax compliance because only limited records, returns will be required and reporting to only one department of GST will simply reduce various types of cost of the assessees.
5. Facilitate “Ease of Doing Business”:
Ease of doing business is the major focus area of the Government which is also the main ingredient of ambitious Make in India concept. With the improvement in ease of doing business, people will come and make in India. India’s ranking on the Doing Business Index of the World Bank has improved significantly from 140th in 2014 to 130th in 2016.The transaction and compliance cost of doing business will come down under GST and simplification of Indirect Tax as GST will facilitate ‘ Ease of Doing Business’ in India.
6. More Money to Backward States:
In the present Indirect Taxation regime, manufacturing States tax collections are higher than consuming States and so manufacturing states have more money for the development of state because of sharing of tax revenue. GST will ensure that tax collections in other States also rise because GST is consumption based tax. Being consumption based tax, tax collection will go to the states in which the goods will be consumed and not where it is manufactured. Therefore, GST will be another advantage to the backward states because more taxes will accrue to States where the population is higher.
7. Increase Investment in India Leads to Create Job Opportunities
Stable and transparent tax regime will encourage local and foreign investment in India creating significant job opportunities. The International Monetary Fund, Managing Director, Ms.Christine Lagarde rightly said “GST move will help create jobs, increase revenue to finance health, education etc. and promote domestic manufacturing.”
8. Reduce Corruption and Tax Evasion
Corruption is one of the major problems that India is overwhelmed with. We cannot expect anything substantial unless there exists a political will to root it out. GST will be a step towards corruption free Services. All Traders will insist on taking bills for all their purchases, Electronic processing of tax returns, refunds and payment of GSTNET without human intervention will reduce corruption and tax evasion.
9. Leading to Supply Chain Efficiency:
Abolition of tax barriers like CST and Entry tax will allow free flow of goods across the Country without additional tax cost leading to supply chain efficiency and economy of scale in manufacturing. Logistics Industry can trim significant costs and harassment of logistics staffs massively reduce at check points because long and winding queues at border check-points and other entry points negatively impacts on Logistics Industry and their staffs and time bound perishable products wastage will also reduce at its minimum level.
10. Reduce Price of Goods:
With wider tax base under GST the tax rate is expected to be kept at moderate level hence price of goods will come down in the medium term and apart from the various reasons of reduction of price of the product, one of the major reasons of reduction of price of the product is reduction in logistics cost which means overall reduction on the price of products which is finally consumes by the consumers.
11. Reduce Scope of Black Money Generation
Use of digital tax administration process and wide tax base under GST covering all goods and services will reduce scope for black money generation with consequent increase in capital formation and productive use of national resources.
12. Expand Tax NET:
Presently a lot of sectors do not come under the purview of indirect taxes and particularly the unorganized sector is not currently incentivized to register under tax net. In GST regime, all inputs will largely have an in-build GST component. To claim tax credit, they will need a tax invoice from input providers. Hence, smaller unorganized players, operating for large industries in the whole value chain of product manufacturing and their final sale will be compelled to get themselves registered under the GST regime. GST will be dual monitoring structure of Centre and State so probability of detecting evasion will increase. Recommended Articles –
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