Impact of GST on Indian Economy, GST Impact in India 2017 Full Analysis

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Impact of GST on Indian Economy, Impact of GST in India. Amidst economic crisis across the globe, India has posed as a beacon of hope with ambitious growth targets, supported by slew of strategic missions like ‘Make in India’, ‘Digital India’, etc. Goods and Services Tax (GST) is expected to provide the much needed stimulant for economic growth in India by transforming the existing basis of indirect taxation towards free flow of goods and services within the economy and also eliminating the cascading effect of tax on tax. In view of the important role that India is expected to play in the world economy in the years to come, the expectation of GST being introduced is high not only within the country, but also in neighboring countries and in developed economies of the world. check more details about “Impact of GST on Indian Economy” from below…..

The introduction of Goods and Services Tax on 1 st of July 2017 was a very significant step in the field of indirect tax reforms in India. By amalgamating a large number of Central and State taxes into a single tax, the aim was to mitigate cascading or double taxation in a major way and pave the way for a common national market. From the consumer point of view, the biggest advantage would be in terms of a reduction in the overall tax burden on goods, which was estimated to be around 25%-30%. Introduction of GST would also make Indian products competitive in the domestic and international markets. Studies show that this would have a positive impact on economic growth. Last but not the least, this tax, because of its transparent and selfpolicing character, would be easier to administer.

GST Impact on India

Impact of GST in Indian Economy

(a) Increased FDI: The flow of Foreign Direct Investments may increase once GST is implemented as the present complicated/ multiple tax laws are one of the reasons foreign Companies are wary of coming to India in addition to widespread corruption.

(b) Growth in overall revenue: It is estimated that India could get revenue of $15 billion per annum by implementing the Goods and Services Tax as it would promote exports, raise employment and boost growth. Over a period, the dilution of the principles may see that only part of this is accruing.

(c) Single point taxation: Uniformity in tax laws will lead to single point taxation for supply of goods or services all over India. This increases the tax compliance and more assesses will come into tax net.

(d) Simplified tax laws: This reduces litigation and waste of time of the judiciary and the assessee due to frivolous proceedings at various levels of adjudication and appellate authorities. Present law appears to be much worse and an amalgam of the bad parts of VAT/ ST/ CE.

(e) Increase in exports and employment– GST could also result in increased employment, promotion of exports and consequently a significant boost to overall economic growth and factors of production -land labour and capital.

Impact of GST on Indian Economy

  • 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

The introduction of Goods and Services Tax would be a very noteworthy step in the field of indirect tax reforms in India. By amalgamating a large number of Central and State taxes into a single tax, it would alleviate cascading or double taxation in a major way and pave the way for a common national market. From the consumer point of view, the biggest advantage would be in terms of reduction in the overall tax burden on goods and services. Introduction of GST would also make Indian products competitive in the domestic and international markets. Last but not the least, this tax, because of its transparent character, would be easier to administer. However, once implemented, the system holds great promise in terms of sustaining growth for the Indian economy.

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10 COMMENTS

  1. It is definitely make an impact on small scale industries, for example PMEGP . I have got an
    approval of 25 lacks loan for Mineral Water Plant , the KVIC subsidy considered 25% of the total
    project, which is 6,25,000 rupees, but under the GST the procurements are costing me 18% GST which is
    4,50,000. and the other expenses like legal opinion lawyer fee, property mortgage, Bank document charges,
    Insurance etc., are near about 75,000/=. So what is left is 1 lack rupees as subsidy, there are so many other
    expenses to procure the loan like travel expenses. At the end of the day the subsidy is almost is not left
    for industry risks. No industry will run on the next day of establishment with profits, who ever taking the risk of such loans are going to be in risk of loosing their property which is mortgaged to the bank. I am in big trouble, I have completed my all procedures, now the bank wants GST to be followed strictly. My humble request to the concerned people to take immediate action to bring it to the Honorable Prime minister to consider immediately to sort out this issue to benefit as tax free to the PMEGP Schemes and also who paid the
    GST / CST under this scheme to be paid back fairly. otherwise like farmers suicide ,this will come out or they
    will become defaulters in payments within no time. In india every business is running with competitive, new comers to resist in the market it is utmost important to help them as much as possible in financially. So the skilled people who are taking risk can dare to step in to generate some employment for semi skilled people.
    If any one can help me in this regard please call me or send me email.
    reddy_sigma@yahoo.com, Mobile No. 7995496032. Thanks for reading.
    Bet Regards/Reddy

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