Impact of GST on the Indian Economy

Abstract

Economic benefits to the maximum possible extent by fulfilling the needed requirements. To what extent we are able to exploit the economic benefits depends upon the extent we are able to create an environment congenial for such an activity. Indian policies became more positive about promoting export and allowing foreign capital to participate in the process of Indias growth. Globalization and liberalization have become order of the day.

The main reason to implement GST is to abolish the cascading effect on tax. A product on which excise duty is paid can also be liable to VAT. Suppose a product A is manufactured in a factory. As soon as it releases from factory, excise duty has to be paid to central government. GST would eliminate to a large extent, the multiplicity of administrative mechanisms and tax rates across different states. It will reduce complexity in tax and increase compliance. It removes many of the cascading effects of indirect taxation. This multiplicity of taxes at the State and Central levels has resulted in a complex indirect tax structure in the country that is ridden with hidden costs for the trade and industry. Firstly, there is no uniformity of tax rates and structure across States. Secondly, there is cascading of taxes due to tax on tax. The introduction of Goods and Services Tax (GST) would be a significant step in the reform of indirect taxation in India. Amalgamating several Central and State taxes into a single tax would mitigate cascading or double taxation, facilitating a common national market. The simplicity of the tax should lead to easier administration and enforcement