In the times when the world economy is going through the major crisis, India has lit a torch of hope with their ambitious growth targets. The Indian government is being specifically supportive to campaigns like Make In India and Digital India to further their economic growth.
Amidst all this, the new launched GST (Goods and Services) tax is another bold step which is expected to bring some stimulant to the economic growth. The government has pinned a lot of hopes with the transformation of the base of the indirect taxation in the country to ensure the free flow of goods and services.
It is expected that GST will bring down the cascading effects of taxation and India will inspire other nations with their bold move in the years to come. All the world economies are expecting GST to be a milestone decision with the perspective of boosting the Indian Economy. But, exactly how it is going to change the economic scenario for the country? Let’s find out!
How will GST impact the Indian Economy?
- The introduction of GST will reduce the tax burden on the producers and will also foster the growth with more production rate.
- The previous tax structure was fuelled with myriad tax clauses that prevented manufacturers from producing goods to their full potential. GST will eliminate this problem of limited production by providing the tax credit facility to the manufacturers.
- Earlier, different types of tax barriers like toll plazas were imposed while transporting the goods. These tax barriers lead to wastage of unpreserved items, which in return became a penalty for manufacturers in the form of extra buffer stock and warehousing cost to meet the demand. Implementation of the single tax system i.e. GST will eliminate these kinds of unnecessary road blocks.
- GST will bring more transparency to the taxation system as the end consumer will become aware of what taxes they are charges and on what basis.
- Extending the tax base with GST will significantly add to the government revenue.
- Producers will now be able to get a tax credit for the taxes they have paid throughout the goods and services chain. This is expected to encourage manufacturers to purchase raw material only from the registered dealers and will also bring more suppliers and vendors under the tax slab.
- With the introduction of GST, there will be no excise duty applicable on exports, which will increase the Indian economy’s competitiveness in the international markets as the cost of transactions will be lower.
- Less tax compliance and simplified fiscal policies will encourage people to adapt to new tax system actively.
- GST will bring down the manufacturing cost with a low burden of taxes on the small scale manufacturers. Hence, the prices of consumer goods will ultimately fall.
- GST will lower the burden on the common man as they will pay less for the same commodity which was earlier costlier to them because of too many taxes.
- The demand and consumption of goods will increase. Increased demand means increased production.
- There will be a control over the black money circulation as the traders and shopkeepers will be checked periodically for their transactions.
Will GST Mean a Brighter Economy?
The introduction of GST is being touted as a very noteworthy move for indirect tax reforms in the Indian economy. The Centre has taken a bold step by merging a large number of central and state taxes into GST. It is expected that GST will double the taxation and will also become easier for the industries to imply.
As for the end consumer, the main benefit will come in the form of the reduction in their overall tax burden for the goods and services they are availing. GST will make India a competitive sphere in the international markets.
Now that it has been imposed, the taxation system will bring sustainable growth to the Indian economy.