Advantages of GST in India The Goods and Service Tax (GST) which is to be implemented in India is one of the biggest tax reforms, expected to spur economic growth in India and boost exports. In an ideal scenario, all credits of taxes paid on purchase or receipt of inputs, input services and capital goods are allowed for set-off against the tax payable on subsequent supply of goods or services. Hence, GST is a destination based tax, levied at a single point at the time of consumption of goods or service by the ultimate consumer. In this article, we look at some of the major advantages of GST implementation in India. The Central and State Government would benefit from increase in tax collection due to the widening of tax base and coverage of taxable supply of goods / service. Multiple taxes on goods and services in existence now would be abolished or subsumed into GST, making compliance easy. As GST compliance is expected to be easier, voluntary compliance by businesses with GST is expected to increase – widening the tax base. GST would create a common market across India and reduce compliance costs. GST implementation would standardise the procedure for GST registration, GST return filing and GST payment across India. GST would improve manufacturing and distribution efficiency by removing the cascading effect of taxation. GST would reduce cost of production of goods / services and increase demand for production of goods / services. GST is expected to reduce tax litigations , thereby allowing the Entrepreneurs to focus more on business. GST is expected to reduce corruption in the system by reducing litigation, centralisation and reduction of discretionary powers with Government officials. GST would provide India with a competitive edge in international market, leading to increased exports. Increase in tax base and equality of tax treatment on goods or services is expected to increase tax revenues for the Government. GST would reduce tax administration cost, improve transparency and boost efficiency. GST is expected to help bring down the inflation and fiscal deficit in the medium term. Tax on imported goods is expected to be reduced by 5 – 10%. GST implementation is expected to make the process for obtaining tax registration easy and online. GST implementation is expected to provide a fillip to foreign direct investment in India due to improvement in ease of doing business. For more information, you can also refer to an earlier article on the advantages of GST implementation in India.
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