As we already know about GST which will be implemented in India from Year 2016 expectedly and replacing the Existed taxes levied by Central and State Governments. So it will be very important for us to know about its importance in Economy.
The introduction of GST would be significant step in the reform of Indirect Taxation in India. Amalgamating Several Central and State Taxes into single tax would mitigate cascading or double taxation, facilitating a common national market. The simplicity of tax should lead to easier administration and enforcement.
Benefits of GST :-
1. For Consumers or Common Man
The biggest advantage for common man would be in terms of a reduction in overall tax burden on goods. All taxes that are currently exist will not be Exist anymore. This means current Taxes like Excise, octroi, sales tax, service tax, turnover tax etc will not be applicable and all that will fall under common tax called as GST.
So it helps Common man to save more money through GST.
2. For Business point of View
GST will be boon for business man. No multiple taxes means compliance and Documentation will be easy. Return filing, tax payment and refund process will be easy and hassle free.
There are many other Advantages for Manufacturers and Traders are :-
1. Common Market– There will be common market in the absence of CST and entry tax. At present, goods are being sold mostly within the state in order to avoid paying the CST which is not credited at the stage of manufacture or in course of trading. Good quality products being manufactured in one part of the country will find more market on the farthest part of the country because there will be no CST and no entry tax.
2. Difference between Goods and Services will go– In some cases, there is distinction between goods and services when they are sold as a package. These controversies will go.
3. Invoicing will be simpler– At present, the invoices are more detailed since taxes on goods and services are written separately for one transaction. With the introduction of GST only one rate will be written.
4. Cost Reduction- The suppliers, manufacturers, wholesalers and retailers are able to recover GST incurred on input costs as tax credits. This reduces the cost of doing business, thus enabling fairer prices for consumers.
Some Common Benefits of GST are:-
Helps in Reducing Corruption- Number of Tax Department will reduce which in turn may lead to less corruption.
Effectiveness- GST is more comprehensive, effective, transparent, and business friendly tax system.
So overall we can say that, GST is expected to bring a no. of benefits to the Indian economy. It is also important for businesses to start gearing themselves for GST. They should evaluate their present business scenarios and brainstorm what kind of changes GST will bring to their business. As and when the Government gives an opportunity to the industry, they should be ready with their representations and suggestions. Further, since GST is expected to completely transform the way business is done, the respective teams should be communicated about the transition, like IT, finance, Compliance, supply chain, pricing, procurement etc.
For Example:-The IT teams should be prepared for changing the IT infrastructure in alignment with GST like change in the invoice formats, accounting records etc
Conclusion: – GST is probably one of the most positive and transformational change in the tax structure of India. It is expected to trigger our economy to a great growth.
(Author is a CA Final Student)