Don't need a log table or algorithmic calculators for figuring out your monthly budget after GST.
GST is the talk of the town. And with so much talk, confusion is bound to set it. Get all the information under one roof.
Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
India is projected to play an important role in the world economy in the years to come. One of the undertakings that is expected to stimulate India's economic growth is the Goods and Services Tax (GST).
GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. It is an attempt to make India one unified common market, reduce the administrative complications, and simplify the indirect tax system. The introduction of GST is a significant step towards reforming the indirect taxation process in India.
Let's take a look at why GST tax bill is regarded as a revolutionary one and what are the benefits it holds for the entire value chain.
Benefits for the Businesses
Removal of cascading tax: ‘Cascading tax’ is when tax is collected at each stage of the process till it is sold to the end consumer, thus resulting in double taxation. GST aims to follow a ‘One Nation, One Tax' policy with a single tax structure across the country, which will eliminate 'tax on tax' being charged throughout the value chain.
Ease of doing business & Standardization: Multiple taxes being charged at multiple points, and all other allied factors have made it very difficult for businesses to operate in India. One of the core benefits of GST is that it is standard throughout the country and will simplify indirect taxes. GST is expected to come as a huge relief, making it easy to perform trade and conduct business irrespective of national geography.
Benefits for the Central and State Governments
Ease of administration: Multiple indirect taxes at central and state levels, lead to a lot of complications and confusion, making it difficult to administer. Due to a strong and uncomplicated IT system, administration of indirect tax under GST would be much simpler.
Increased tax compliance: There is an inbuilt mechanism in the design of GST that incentivizes traders who comply with taxes, transferring input tax credit through the value chain. This, along with a robust IT infrastructure is expected to result in better tax compliance.
Higher revenue: Since indirect taxes were applicable at multiple stages, the cost of collecting taxes was also high. However, GST is expected to decrease this cost for the Government, leading to higher revenue efficiency. further revenue gain is expected due to other surrounding factors.
Increase in investment in India: According to Christine Lagarde, Managing Director IMF, GST will help create jobs, promote education, promote domestic manufacturing, increase revenue, etc. A stable and transparent tax regime leads to a strong business sector, which further encourages local and foreign investment.
Benefits for the Economy
Growth of GDP (Gross Domestic Product): Introduction of GST will help reduce tax rates, remove multiple point taxation, and increase revenues. Basically, a uniform tax system will make India a common market, and will boost trade, commerce, and export. Together, these will help accelerate economic growth and boost the GDP of the country. Several experts are anticipating this growth to be somewhere around 1-2% and expecting GST to bring down inflation by roughly 2% as well.
Reduction in Corruption and Tax Evasion: Corruption has been one of the biggest problems for India. GST, due to its robust IT infrastructure, simplified returns and payment system, and minimum human intervention, can prove to be the much needed step towards tax evasion and corruption-free services.
Benefits for the Consumer
Transparency: The complexity of the present indirect tax structure prevents transparency. GST being a uniform tax system, it would yield the necessary information to the end consumers and help create a transparent environment.
Overall tax relief & reduced Cost: The present system has many complications, which have a cumulative effect on the pricing for the end consumer. Multiple indirect taxes collected at all progressive stages of the value chain in the present system lead to an increase in the prices of all commodities. GST is expected to drop the overall tax burden on many commodities, thus eventually benefiting the end consumer.
A national tax reform of such high enormity that touches millions of consumers and producers is definitely a commendable effort and is expected to be a win-win for all!
You have already rated this article