Learn, How, What is it, Do you Know Benefits of GST (Goods and Services Tax)?
GST stands for Goods and Services Tax which will be levied on the supply of goods or services or both in India. GST will subsume a number of existing indirect taxes being levied by the Centre and State Governments including Central Excise duty, Service Tax, VAT, Purchase Tax, Central Sales Tax, Entry Tax, Local Body Taxes, Octroi, Luxury Tax, etc. Also learn, GST, PDF, Do you Know Benefits of GST (Goods and Services Tax)?
It brings benefits to all the stakeholders’ viz. industry, government and the citizens. It is expected to lower the cost of goods and services, boost the economy and make our products and services globally competitive. GST aims to make India a common national market with uniform tax rates and procedures and removes the economic barriers, thereby paving the way for an integrated economy at the national level. By subsuming most of the Central and State indirect taxes into a single tax and by allowing a set-off of prior-stage taxes for the transactions across the entire value chain, GST would mitigate the ill effects of cascading and thereby improve our competitiveness.
GST or Goods and Service Tax is common tax system proposed by the government. As the name suggests it is a common tax for Goods and Services. In simple words today we are paying multiple taxes such as excise duty, customs duty, value added tax, octroi, service tax etc.
The Benefits of Goods and Services Tax (GST):
Elimination of Multiple Taxes:
The biggest benefit of GST is an elimination of multiple indirect taxes. All taxes that currently exist will not be in the picture. This means current taxes like excise, octroi, sales tax, CENVAT, Service tax, turnover tax etc will not be applicable and all that will fall under common tax called as GST.
Saving More Money:
For a common man, GST applicability means the elimination of double charging in the system. This will reduce the price of goods and services & help common man for saving more money. It is expected that price of FMCG products, small cars, cinema tickets, electrical wires etc is expected to reduce.
Ease of business:
GST will bring one country one tax concept. This will prevent unhealthy competition among states. It will be beneficial to do interstate business.
Easy Tax Filing and Documentation:
For a businessman, GST will be a boon. No multiple taxes means compliance and documentation will be easy. Return filing, tax payment, and refund process will easy and hassle-free.
Cascading Effect reduction:
GST will be applicable at all stages from manufacturing to consumption. GST will provide tax credit benefit at every stage in the chain. Today at every stage margin is added and tax is paid on the whole amount, in GST you will have tax credit benefit and tax will be paid on margin amount only. It will reduce cascading effect of tax thereby reducing the cost of the product.
As GST will reduce the cost of producing it is expected that demand for the product will increase and to meet the demand, supply has to go up. The requirement of more supply will be addressed by only increasing employment.
Increase in GDP:
As demand will grow naturally production will grow and hence it will increase gross domestic product. It is estimated that GDP will grow by 1-2% due to GST.
Reduction in Tax Evasion:
GST is a single tax which will include various taxes, making the system efficiency with very little chances of corruption and Tax Evasion.
More Competitive Product:
As GST will address cascading effect of the tax, inter-state tax, high logistics cost it will make manufacturing more competitive. This will bring advantage to businessman and consumer.
Increase in Revenue:
GST will replace all 17 indirect taxes with the single tax. Increase in product demand will ultimately increase tax revenue for state and central government.
Goods and service tax is a boon for the Indian economy and the common man. It is a welcome step taken by the government.