The Government of India’s plan to bring various state and central taxes under one umbrella under GST will turn the country into a unified market that will benefit various stakeholders.
Goods and Service Tax (GST), which will roll out this July will be a single taxation on goods and services supply from the manufacturer to the consumer. It will be a tax only on value addition at each stage. And in the supply chain, the consumer will bear only the last dealer charge.
Among the stakeholders, the business and Industry will experience easy and transparent compliances under GST, as all the taxpayer services such as registration, payment, return, etc. will be available online.
There will be uniformity in the tax rate and structure, making tax neutral irrespective of the place of doing business. GST will also minimize the cascading of tax and hidden cost of doing business.
The cost of locally manufactured goods and services will be reduced. And the reduction in the transaction cost will improve trade and industry competition in the international market, giving a boost to exports. Later, in long run, the uniformity in tax rates and procedures will also reduce the compliance cost.
Under GST, the Government, both state and central, will exercise an easy and simple administration as the multiple levies will be replaced by one taxation system, supported by a robust IT system – GST Network (GSTN).
It will help to control leakage with its inbuilt mechanism which will incentivize the tax compliances by traders. GST will also lead to higher revenue efficiency as it will decrease the Government’s cost of collection of tax revenues.
For the consumers, the taxation system will be easy to understand and transparent as there will be only one tax from the manufacturer to the consumer. Moreover, the overall tax burden on many commodities will descend due to efficiency gains and leakages preventions.