Goods and Services Tax or GST has completed more than 2 years and proven to be a successful reform in eliminating the indirect taxes in India. The GST bill was introduced by the President of India, and Government of India on July 1, 2017, and since then the date is celebrated as GST day every year.
The old tax system was a little confusing for the traders across the country. This was because there were various taxes across every stage of manufacturing that were largely non-uniform. However, with the introduction of GST, there is now a uniform, multi-stage tax across all services and goods. GST has successfully managed to eliminate the cascading effect of non-uniform tax laws by providing an increased efficiency in logistics and regularization of the unorganized tax sector. GST has successfully replaced several indirect taxes like excise duty, Service tax, VAT, etc. Today, all the traders across the country follow the same tax system.
The impact of GST has been significant on the Indian economy. The points mentioned below discuss this impact in detail –
1. Increased Competitiveness
The retail prices dropped as the indirect taxes were removed. The total tax component of the manufactured product in India is around 25-30% of the cost of the product. Now, due to the implementation of GST, the prices went down as the burden of the taxes came on the shoulders of the final consumers of such goods and services. This helped the manufacturers to increase production and in turn, increases competitiveness.
2. Simple Tax Structure
Single tax system saves a lot of time and money. The indirect taxes to be paid in every phase of the supply chain was much more complicated and confusing than paying a single tax. Also, the calculation of taxes is relatively easier under uniform GST.
3. Economic Unity
GST was founded under the notion of one nation, one market, and one tax. GST, which is also termed as destination based tax, has eased the transport of manufactured goods and products from one state to another. This has encouraged the manufacturers to increase the production as the demand has also increased. This, in turn, has helped the government to focus on PAN – India operations.
4. Tax revenues
The simpler tax reform has made way for higher compliance, increasing the number of taxpayers. This has positively affected the successful revenue collection for the government. In fact, the tax collection under GST saw a considerable growth of taxpayers and revenue at the end of the first year of its introduction itself.
5. Reduced inflation
The reduced inflation has eliminated the effect of cascading taxes. Cascading tax system or tax on the tax system is not only complicated but also leads taxpayers to leak taxes. As a result, the money does not reach the government. With the introduction of GST, this has been avoided.
6. Uniform tax regime
Due to multiple taxes, there was a chance of taxes being capped by the taxpayers. However, with a single tax reform introduced throughout the country, many taxpayers are standing in the queue to pay the government’s share. This effect of paying taxes has enabled the government to plan the country’s growth more effectively.
GST has been one of the biggest decision taken by the Indian government for the fast growth of the country. The GST bill introduced in 2017 has been a boon to the country’s taxpayers. Not only the taxpayers but also the final consumers can see the positive effects of the GST bill. With one nation, one market, and one tax the overall prices of the goods and services have gone down relatively. However, there has been certain downfall noticed due to the implementation of this policy. For instance, the fixed interest rate of 18% has made availing a business loan to be an expensive affair. Thankfully, the impact of these detriments is much less in comparison to all the positive economic executions.
Also know what is an eway bill, how to generate it and why it is important only at Finserv MARKETS
To know more about GST and its impact on the economy, along with the pros and cons of GST implementation on business loans, visit Finserv MARKETS. You will find all your answers here. The Bajaj Finserv Business Loan offers fast online processing with minimal documentation. The Finserv MARKETS platform assures 100% transparency in your transactions at zero collateral costs, instant approval and also quick disbursal. For more information, visit now!
You can also read about benefits of business loan on Finserv MARKETS. In addition, get more information on points to consider to save taxes using a personal loan.
Finserv MARKETS, from the house of Bajaj Finserv is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment and exclusive EMI store, all under one roof- anytime, anywhere!