Goods and Services Tax (GST) is considered to be the big most awaited tax reforms of India. It is an indirect tax reform which aims to remove tax barriers between states and create a single market. Under GST, only value addition will be taxed and burden of the tax is to be borne by the final consumer.
Know the benefits of GST:
1. No more multiple taxes
The major advantage of GST is an elimination of multiple indirect taxes. All taxes that currently exist will not be levied after implementation of GST. Excise duty, octroi tax, sales tax, CENVAT, Service tax, turnover tax etc will not be applicable if GST came into effect. This all taxes will fall under GST only.
2. Easy business
GST aiming at one country one tax concept. So every state will come under one tax only. This will prevent unhealthy competitions among states. For those doing interstate business, this is a good thing. GST helps people who want to open branches in other states.
3. Easy tax filing
For many entrepreneurs and small scale business man, GST will be a blessing. The complexity associated with taxing and documentation can be avoided after GST came into effect. No multiple taxes means compliance and documentation will be easy. Return filing, tax payment, and refund process will be hassle free after GST. As GST is a single tax, this will reduce tax evasion and corruption, making the system more effective.
4. Reduction in cost
By GST, the double charges will be eliminated. The VAT on produced goods of FMCG like soaps, detergents, cosmetics, apart from excise currently exists. This will be eliminated after GST. This will reduce the price of goods and services which help common man for saving more money. The price of FMCG products, small cars, cinema tickets, electrical wires, paint products etc is expected to reduce after GST. Also GST will bring advantage to businessman and consumer.
5. More Employment
As GST will reduce the cost of product it is expected that demand for the product will increase and to meet the demand, supply has to go up. The requirement of more supply will be addressed by only increasing employment. GST will lead to an increase in GDP of at least 2 per cent, which would lead to employment generation.
6. From input to output
GST will be applicable at all stages, that is from manufacturing to consumption. This will provide tax credit benefit at every stage in the chain. Now, at every stage from production to consumption, the tax margin is added and tax is paid on the whole amount. After GST, people will have tax credit benefits. The tax will be paid on margin amount only. This will reduce cascading effect of tax. This also results in cost reduction.
7. Increase in GDP
As demand will grow naturally production will grow. This will increase gross domestic product. It is estimated that GDP will grow by 1-2% after GST. These Things Could Get Cheaper After GST
8. Increase in Revenue
GST operates under, one country one tax rule. It will replace all 17 indirect taxes with a single tax. The increase in product demand will ultimately increase tax revenue for state and central government.