The Government of India is quite optimistic about the Goods and Services Tax (GST), a value added tax, which is going to be levied from April 01, 2016. Based on the destination principle which means imports would be subject to GST, while exports would be zero-rated and the State tax would apply in the State of destination while revenue will be transferred to origin states. GST would be applied to majority of goods and services and very few items will be exempt under the new tax reform. It would help to avoid double/multiple taxation and lower down the input costs.
GST sounds more appropriate and simple for a growing economy like India. First of all, due to a wider tax base it will create a transparent regime that will induce lower tax rates and reduce corporate as well as individual tax burden. Tax
bearers often complain about double taxation issues in the present
system, but after the commencement of GST this problem will be vanished
completely. Eventually, people will experience a simpler and easier
compliance procedure. In addition, a more comprehensive and transparent
system will lead to better management and reduced compliance costs.
According to Mr. Kislay Pandey, the famous corporate lawyer of the Supreme Court of India, "GST is in the favor of all, it will decrease tax
burden on both producer and consumer and accrue growth to the country's
GDP. After the introduction of GST, we hope that there will be 1.5 per
cent rise in the country's GDP. The implementation will help to create a
common market and reduce the cost of goods and services." Though it will be too early to estimate the growth of annual GDP after the successful implementation
of GST, but it is quite certain that its benefits will be rather wider
and the cascading effects will be visible soon in almost every industry
and work area. Service industry too will avail the benefits of GST in a
more proper manner.
Most of the indirect taxes such as central sales tax, state sales tax, octroi, service tax,
excise duty, CVD and SAD, will be replaced after the advent of GST. It
will affect for long-term revenue and is also expected to result in a
reduction in inventory costs. Moreover, GST is one of the most accepted tax system all over the world which is adopted by more than 150 countries. India's acceptance to GST will trigger a fair competition in the market and gives a push to the export sector.
