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IMPECT OF GST ON INDIAN ECONOMYProf. Anshu Mishra
Shri Vaishnav College of Commerce, Indore Special Guidance by
Dr. Sachin Sharma
Principal Annie Besant College Indore
In developing countries like India, the taxation system is having very crucial role in the development of revenues of the country. In order to overcome Government of India try to simply taxation system resulting, introduced GST. Goods and Service Tax [GST] is an indirect tax collection system which is applicable on supply of goods & services in India.
GST came in to effect from 01st July, 2017 through the implementation of the 101 Amendments of the Constitution of India by Indian Government. The GST replaced existing multiple taxes levied by Central and State government.
This paper made to show the impact of GST on Indian economy. The study is exploratory in nature and secondary has been used for study. The data have been collected from Newspapers, Journals & Internet etc.
Keyword: GST, Economy, GST Council, Taxation reforms.
GST is a single tax on supply of goods & services. It improves overall economic growth of the nation. It is comprehensive indirect tax levy on manufacture sales, consumption of goods & services at national level.
1 DEFINITION OF GST
“Goods and Services Tax [GST] is a tax on goods and services with value addition at each stage having comprehensive and continuous chain of set of benefits from the producers /service providers point up to the retailers‟ level where only the final consumer should bear the tax.”
The GST is governed by GST COUNCIL headed by Finance Minister of India. Under GST regime, goods and services are taxed at slabs of (No Tax) 0%, 5%, 12%, 18%, and 28%
decided in periodical meeting of GST Council also attract CESS over and above the base rate liability which ranges between 1 and 25 percent.
“For corporate, the elimination of multiple taxes will improve the ease of doing business and for consumer the biggest advantage would be in terms of a reduction in the overall tax burden on goods. Inflation will come down, tax avoidance will be difficult, India‟s GDP will be benefited and extra resources will be used for welfare of poor and weaker section.” Finance Minister said at the GST launch in Parliament.
The LOK SABHA has finally passed the Goods and Services Tax Bill and it is expected to have a significant impact on every industry, consumer and services. Apart from filling the loopholes of current system. It is also aimed at boosting the Indian economy. This will be done by simplifying and unifying the indirect taxes for all states throughout India.
Research Methodology: It is type of descriptive research paper.
Objective of Study:
1) To highlight the impact of GST ON Indian Economy.
2) To explain the working mechanism of GST in India.
Importance :
1) The study will highlight the effect of GST on Indian Economy.
2) It will prove to be at great help to a common man to understand the concept of GST.
3) It will remove the fear of GST from common man, corporate sector, manufacturing and so on.
Data Collection: This paper is based on secondary data collected from different sources like – books, articles, news-papers & internet etc.
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Need for GST to Citizens:
i) Simple tax system
ii) Reduction in prices of goods & services due to elimination of cascading.
iii) Uniform prices throughout the country.
iv) Transparency in taxation system.
v) Increase in employment opportunity.
Need/Advantage of GST to Trade/ Industry:
i) Reduction in multiplicity of taxes.
ii) Mitigation of double taxation.
iii) Development of common national market.
iv) Simple Tax regime – lower taxes & exemptions.
Advantages to Central/State Government:
i) A unified common national market to boost Foreign Investment and “Make in India” campaign.
ii) Boost to export/manufacturing activity, improve employment, reduce poverty
& increase GDP.
iii) Improve overall investment climate in the country which will benefit the development of state.
iv) Uniform CGST, SGST & IGST Rates to reduce the incentive for tax evasion.
v) Improved revenue collection.
vi) Sample tax system.
Feature of GST:
i) GST is one indirect tax for entire nation.
ii) It replace earlier multiple taxes like VAT, CST, Excise Duty, Octori, LBT, Luxury Tax & service tax etc.
iii) There are 4 type of GST mainly:
A) Intra State:
a) CGST: Central Goods & Service Tax – levying & collecting tax within state by the State/ Central Govt.
b) SGST: State Goods & Service Tax - levying & collecting tax within state by the State / Central Govt.
B) Inter State:
c) IGST: - levying & collecting tax interstate by the Central Govt.
C) UTGST: levying & collecting tax Union Territories by the UT / Central Govt.
iv) Tax payer with an aggregate turnover, within a financial year, Rs. 20.00 lakhs & Rs.10.00 lakhs for north eastern states, would be exempted from GST.
v) GST Rate: At present, Rates are 0% (No Tax), 5%, 12%, 18% & 28%.
Positive Impacts of GST in India:
i) Removes the cascading system that existed previously when a consumer had to pay tax on an already paid tax.
ii) Removal of clumsy and complex taxation system such as VAT, Service Tax, Excise, CST, CAD, Etc.
iii) The reduction of tax compliances simplified the Tax policy.
iv) GST is able to check the illegal circulation of black money.
v) Lowering of manufacturing costs due to reduced tax burdens brought down the prices of consumer goods.
vi) GST has been beneficial for bringing harmony and regulation in the unorganized sectors like manufacturing and textile.
vii) Talking about the boons of GST that boosted the country‟s economic growth, great improvements and progress made by India in diverse fields after its amendment.
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viii) The motto „One Nation, One Tax‟ has been proved fruitful with theintroduction of GST in India.
ix) The GST, implement on July 1, 2017, is a major phenomenon that transformed the whole economic structure of the country.
x) Whole nation transportation becomes hazel free.
Negative Impact of GST:
i) If actual benefit is not passed to consumer and seller increases his profit margin. The price of the goods also exhibit rising trend.
ii) Dual Control: The state may lose autonomy to change the tax rate which will be regulated by the GST Council. A business will be indirectly controlled by both the Centre and State in tax related matters.
iii) Post GST, the service tax rate on higher side; hence service industry will bear the brunt of higher taxes.
iv) Higher tax rate are providing privileges to tax evadersfor adopting dishonest tax reporting such as wrong claiming of ITC on bogus invoices.
However, GST is a long term strategy and positive impact shall only be seen inlong run. Let us hope GST proves to be a game changer in a positive way and prove to be beneficial to the common man.
2 CONCLUSION
At present, GST is at the infant stage in Indian Economy. It will take some time to experience its effectson Indian Economy. GST mechanism is designed in flexible manner and it is expected to generate good amount of revenue for both sate and central government. Regarding corporate, businessman and service providers it will be beneficial in long run. It will bring transparency in collection of indirect taxes benefiting both the government as well as people of India.
REFERENCES
1. http://economictimes, indiatimes.com/news/economy/policy.
2. Htto://indianexpress.com/article/explained/gst-bill.parliament.
3. GST Book – Shripal Sakleja.
