Impact of GST on Indian Economy.GST was first proposed in the year 2000 when AtalBihari Vajpayee was the Prime minister of India. Since then the work on GST structure have been worked on by our economist and political learners. In the reign of Congress, it attempted to implement GST on its time but the then opposition party BJP rejected the idea each time.
gst and its impact on indian economy
Now BJP itself has come out with the plans what MrManmohan Singh had earlier proposed for the economy. The GST in India has been implemented on 1st July 2017. India is not the only country to have GST as its tax structure. Before this almost 160 counties have implemented GST. First GST was implemented by France in 1954. GST will have positive and negative both effects on economy.gst and its impact on indian economy. On local markets and small traders it may have some negative effects and also the small traders are on strike but it may be presumed that the overall economy may be befitted through the GST. At least as of now it should be presumed.
GST and its impact on Indian Economy
GST stands for Goods and services tax and it has done away with all the indirect taxed on commodities and services and replaced all of them with a single tax which is called GST. It has eliminated the indirect taxes of the central government and state government also. State government levies its own taxes and central government levis its own taxes on various items from manufacturer to the end user. gst and its impact on indian economy.Now all these indirect taxes have been replaced by a single GST. India as acquired a double structure of GST where both center and state government will levy tax on a single commodity simultaneously and the tax will be divided in equal proportion. For example if a service tax is 18% then 9% of the GST will go to Central government while another 9% will go to the state government.
Some of the presumed impacts of GST on Indian Economy are as under:
- Reduce tax burden on producers and foster growth through more production. This double taxation prevents manufacturers from producing to their optimum capacity and retards growth.
- GST would take care of this problem by providing tax credit to the manufacturer.
- Various tax barriers such as check posts and toll plazas lead to a lot of wastage for perishable items being transported, a loss that translated into major costs through higher need of buffer stocks and warehousing costs as well.
- A single taxation system could eliminate this roadblock for them.A single taxation on producers would also translate into a lower final selling price for the consumer.
- Also, there will be more transparency in the system as the customers would know exactly how much taxes they are being charged and on what base.
- GST would add to government revenues by widening the tax base.GST provides credits for the taxes paid by producers earlier in the goods/services chain. This would encourage these producers to buy raw material from different registered dealers and would bring in more and more vendors and suppliers under the purview of taxation.
- GST also removes the custom duties applicable on exports. Our competitiveness in foreign markets would increase on account of lower cost of transaction.
- The proposed GST regime, which will subsume most central and state-level taxes, is expected to have a single unified list of concessions/exemptions as against the current mammoth exemptions and concessions available across goods and services
But the actual impacts will come only after it is implemented and put to use. Thank you.