GST is the new and biggest tax reform in India. It is going to be implemented from 1st July 2017. It will abolish most of the indirect taxes in India and will be replaced by a single tax i.e., GST. It will bring the concept of “ONE TAX-ONE NATION”.
GST is regarded as a game changer in the industry.GST is going to affect various industries in different ways. Here are some of the benefits of GST.
Benefits of GST: -
1. Single tax system: -
The biggest advantage of GST introduction is reducing the burden of multiple taxes. GST will abolish most of the current indirect taxes. So, there is no need to pay different types of taxes like service tax, sales tax, octroi tax, excise etc.
2. No need to file multiple returns: -
Earlier we need to file separate returns for each type of taxes. With introduction of GST, only one return is enough for all types of taxes. However, one need to file 3 returns every month under GST.
3. Reduction in prices: -
By introduction GST, it is expected that prices will decrease. Since, at present a price of a product consists of many high rate taxes.
4. Ease of business: -
GST brings the concept of ONE NATION-ONE TAX. Earlier if we want to do business in other states, we require to comply with the tax laws and rules of that state. Now with the introduction of GST, business can be done at free flow through out India. This is more beneficial to inter-state businesses.
5. No tax evasion:
Since all the taxes are integrated and made computerized. Tax evasion is very difficult. For example, all the aggregate of monthly returns turnover has to be tallied with annual GST return, which in turn has to be tallied with income tax return of the assessee.
6. More employment:
Due to GST introduction, cost of the products will decrease which in turn increase in demand of product. The increased demand can be met by only increasing the labour power. Thus, GST will also lead to an increase in employment.
7. Removes cascading affect:
GST will be applicable at all stages in the supply chain, i.e., from manufacturing to consumption. It provides benefit of tax credit at every stage. Due to which tax has to be paid on only the margin added at that stage.
8. Increase in GDP: -
Reduction in costs will increase demand of the product resulting in increase in GDP of country. An increase of around 2% GDP is expected dur to GST.
9. Increase revenue: -
GST aims at increasing the tax payer base by bringing SME’s and unorganized sector into its purview. This will increase the revenue of the government.
Every policy decision has its own pros and cons. Experts have also identified some disadvantages due to implementation of GST. But hope that all will be good in long run.