Today a large portion of our income goes towards paying taxes. However, we don’t know ourselves even how many taxes we have been paying so far. Overall we pay 20 types of taxes in India starting from product manufacturing to consumption, putting a tax burden of 30-35% each year.
In general, we pay hoards of indirect taxes which ultimately goes to the central government in the form of excise duty, customs, service tax etc. There are state government taxes as well such as VAT, entertainment tax etc. Even municipality also put a pressure of taxes like water tax, property tax etc. GST Tax rates, however, differs from state to state. In order to overcome all these difficulties and to reduce the tax burden on a common man, Goods and Services Tax(GST) is proposed.
GST or Goods and Service Tax is a single tax system proposed by the Government of India. It is a common tax levied on Goods and Services. It will replace the major form of taxes which a general customer has been paying throughout times. GST will soon be implemented across the country with the same rate. This will provide benefit to a common man in terms of tax reduction. Even this will be advantageous for all businessman across the nation. With a soon to be announced GST on July 1, will bring a massive tax reform in our country. As GST tax slab will be covering all stages of a business cycle starting from manufacturing, consumption till final sales of goods and services. This tax will be in effect on a national level for all the forms of goods and services.
Let’s discuss the plethora of benefits which GST is going to bring in this economy so far:
Removal of Multiple Taxes
The major benefit of GST is an elimination of different forms of indirect taxes. All these prevailing taxes won’t be any longer a part anymore after GST will take over from July 1. In other words, the existing taxes such as excise, octroi, sales tax, CEN VAT, Service tax, turnover tax etc will not find any existence in your bills as all will be merged with the common tax called GST.
Saves More Money
The application of GST to a common man means the removal of double charging in our economic systems. This will minimize the prices of goods and services and assist a common man for saving more funds. It is estimated that prices of FMCG products, small cars, cinema tickets, electrical wires etc. gets further reduced.
Ease of doing business
By consolidating various form of taxes into one, will avoid restricting unhealthy competition among states. It will be advantageous to do interstate business.
Easy Tax Filing and Documentation
GST will prove to be a blessing for all businessmen. No multiplicity of taxes means much easier compliance and documentation processes. There will be easy and hassle free return filing, tax payment, and refund procedure.
Cascading Effect reduction
GST will be implemented at all stages from manufacturing to consumption. GST will offer tax credit advantages at every chain procedure. Presently, at every stage margin is added and tax is paid on an entire amount, in GST you will have tax credit benefit and tax will be paid on comparative margin only. It will downsize the cascading effect of tax thereby minimizing the cost of product.
Additional employment opportunities
With the implementation of GST, the cost of the product goes down and it is expected that product’s demand will increase. In order to fulfill the demand, supply has to go up. The requirement of additional supplies will only be addressed by an increase in the employment opportunities.
Increase in GDP
The increase in demand will further push the production to grow naturally and hence it will increase the gross domestic product. It is expected that GDP will rise by 1-2% due to GST.
Reduction in Tax Evasion
GST is a single tax which consists of different forms of taxes which makes the system effective with very little chances of Tax evasion and corruption.
More Competitive Product
As GST will face the cascading effect of the tax, inter-state tax, high logistics cost will make the manufacturing process more competitive. This will bring benefits to businessman and consumer.
Increase in Revenue
GST will substitute all 17 indirect taxes with a single tax. Increase in demand will substantially increase the tax revenue for state and central government.