Taxation plays significant role
in the economic progress of country. As the taxes are the drivers of the
economy it should be planned in such a manner that is does not become the basis
of distortion in the market. Raising ample amount of revenue is the main
objective of tax law. Policies related to tax are the vital contributor in the
economy. An effective tax system should consider the distribution of income and
should focus on the strategies to generate tax revenues to support government
expenditures on public services and infrastructural growth.
GST stands for Goods and Service
Tax. Domestic trade tax will be levied in the form of a value added tax on all
goods and services, in practice with some exemptions. VAT exempts all inputs
including capital goods. Moreover it is general tax is on domestic consumption.
Basically there is need to change the taxation pattern, as double taxation system
de-motivates the consumer from consumption of products. It also impacts
spending pattern of public. Development of the nation is dependent on the purchasing
power. GST is expedient and an efficient way of levying taxes on the
consumption. Very few exemptions are there because it has single rate and it
becomes a proportional tax on consumption. One level of tax is an effective way
of collection, because it either goes to the state or central level. Tax should
go to the state in which the concerned consumer lives. This will automatically
take place if tax is levied at the central level or state is in unitary level
with the one and only level of tax collection.
Poonam (2017) in her study concluded
that GST would be a significant step in indirect taxation. The cascading as
well as double taxation effects can come down by combining central and state
taxes. Tax burden on consumer will reduce to 25% to 30%. GST. Indian
manufactured products would become more competitive in the domestic and
et al. (2016) in
his study, “Role of Goods and Services Tax in the growth of Indian economy”
concluded that GST will be helpful for the growth of the economy and will also
increase the percentage of Gross Domestic Products by more than two percent.
and Dhanda (2015) in
his study concluded that due to recusant environment of India economy, it is
demand of time to implement GST.
Supriya Kamma and Richa Verma (2014)
said that the new NDA government in India is affirmative towards the
implementation of GST and it is favourable for central government, state
government and consumers in long run if its implementation is being supported by
strong IT infrastructure.
Mawuli (2014) was
of the view that GST is not beneficial for the countries having low income and
does not provide growth. Moreover if these nations want to implement GST then
the rate should be less than 10%.
Dr. R. Vasanthagopal
(2011) studied that if the economy implements
the system of GST from the present complex indirect tax system in India will be
a positive step in booming Indian economy.
Goods and Services Tax (GST) is the significant
tax reform in decades. The research contemplates on understanding the concept
of goods and service tax and its impact on Indian economy in terms of its advantages.
Objectives of the Study
study the concept of Goods and Services Tax (GST)
understand whether it is a torment or a way towards economic development. To
know the advantages of GST in Indian context.
The study aims to study the secondary data
which is available and collected from various books, National &
international Journals, government reports, publications from various websites
which lays emphasis on different facet of Goods and Service tax.
Goods and Service Tax
GST is an indirect tax or we can say that
it is a comprehensive tax which includes almost all the indirect taxes of
central states governments into one integrated tax. As it is very clear from
the name that it is levied on both
goods and services at all the phases of value addition. It has twofold comprises
of the central goods and service tax (CGST) and states goods and service tax
(SGST). CGST incorporates central indirect
taxes like central excise duty, central sales tax, service tax, and special
additional duty on customs, counter veiling duties whereas indirect taxes of
state governments like state vat, purchase tax, luxury tax, octroi, tax on
lottery and gambling comes under SGST.
Integrated goods and service tax (IGST) tax is also a constituent of GST. It is
not an added tax but it is a mechanism to analyze the interstate transactions
of goods and services and to further guarantee that the tax should be received
by the importer state as GST is a destination based tax.
of goods and services tax system offers India an effective tax system and improves
collection of tax. It would end perversion of differential treatments of
manufacturing and service sector. The expectation from GST is that it creates a
business friendly environment, since price levels come down and eventually the
rate of inflation. It will also improve fiscal health of the government as the
tax collection becomes clearer, making tax fudging strenuous.
Advantages of GST
Goods and Services Tax is a very significant footstep in the
sphere of indirect tax reforms in India. By integrating a number of Central and
State taxes into a single tax. It is that expected that it considerably simplify
dual taxation and make taxation overall easy for the industries. Overall burden
on the end customer has reduced and the Indian products become more competitive
in the domestic as well as international markets.
Reduces tax burden on producers and stimulates growth
through more production. The post GST taxation structure had
innumerable tax clauses, intercepts manufacturers from producing to their best
possible capacity and hinders growth. GST takes care of this predicament by
providing tax credit to the manufacturers.
Tax barriers, like check posts and toll plazas, lead
to wastage of unpreserved items being transported. This penalty results into
major costs due to higher needs of buffer stock and warehousing costs. A single
taxation system eliminates this barrier.
More transparency in the system has come as the
customers are now aware how much taxes they are being charged and on also the
By extending the tax base there would be an increase
in revenues of the government
As GST offers credit for the taxes paid by producers
in the goods or services chain. It encourages producers to purchase raw
material from different registered dealers and it is expected to bring in more
vendors and suppliers under the acumen of taxation.
With the implementation of GST there is the removal of
custom duties applicable on exports. Competitiveness of the nation in the
international markets will increase as there would be lower costs of
It will benefit people as prices will come down which
in turn will help companies as consumption will increase.
In the GST system all the taxes are integrated, it
would make possible the taxation burden to be split equitably between
manufacturing and services.
GST is levied only at the final end of consumption
based on VAT principle and not at various points. It removes economic
distortions and brings development of a common domestic market.
GST will also help to build a transparent and
corruption free tax administration.
GST is intended to get rid of the
burden by putting an end to many Indirect Taxes. GST will reduce tax evasions;
it will help to offer more money to backward which ultimately improves the
economy. It will help in exclusion of local tax bias as now the entrepreneur
can set the unit in any state without any apprehension because of unified tax structure.
plays a considerable role in the development of the nation as it impacts the
efficiency and even-handedness. An effective system should control income
distribution and also undertake to generate tax revenue which acts as a
government expenditure on public services and infrastructural development. As GST
has faced lots of disagreement and antagonism in terms of its implementation
and as now it has been implemented definitely it will have a positive impact on
Indian economy in the long run. International trade, firms and end user got a novel
system of taxation which is more transparent. The new system of taxation is a better
system as compared to the pre-existing central excise duty at the national
level and sales tax system at state level. GST is a step forward as well as a logical
act towards a comprehensive indirect tax reforms in the economy. GST is not
only Vat along with service tax but it got significant improvement over
previous VAT system. One state; one tax will facilitate transparency and
simplicity by treating all goods and services alike without giving an unusual/special
treatment to some types of goods and services. It will lessen the litigation on
categorization of issues. As per experts, GST in Indian scenario will lead to
commercial benefits which VAT has not offered. GST assure the gain for industry,
trade, agriculture as well of the central and state government.
well planned GST is a good method to get rid of deformation from the previous
system of multiple taxation. Many Indirect Taxes like Sales Tax, VAT etc., will
be finished because there will be one tax system i.e. GST. GST faced many
challenges after its implementation and definitely will result to give many
benefits. So, GST play a vital role in the growth and development of our
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