The revolution brought by GST in India

The revolution brought by GST in India

The introduction of GST or Good and Services Tax is touted as the biggest economic transformation in the country after India became an independent nation. “GST is good or bad for common man in India” is one of the most trending topic in the country.

The GST model was first conceptualized by Prime Minister Atal Bihari Vajpyee who set up a committee headed by the then West Bengal Finance Minister Asim Dasgupta to design a GST model. In 2004, Vijay Kelkar, then advisor to the Finance Ministry, recommends GST to replace the existing tax regime. Before 1st July 2017, India was plagued with numerous Indirect Taxes in different sectors, which were not properly regulated. To have all of these under a single roof, the current government rolled out the Goods and Service Tax (GST) in a historic midnight event at the Parliament. It took 17 long years for GST to get implemented. This taxation scheme was implemented to scrape out all the other rampant taxes, and put 1.35 billion Indians under ‘one nation, one tax’ scheme. GST comprises of several taxes like VAT, Central Excise Law, Octroi, etc. which were earlier charged separately.

After over a year of a roller-coaster ride of GST implementation, some see this as a necessary reform, which was long due, while others find this to be a bad decision for common people impacting many industries. Needleless to say that this uniform indirect tax has received both appreciation and criticism throughout the country. We here will look upon some of the revolution that GST has brought since its inception:

1. Transparency: – Say No to Hidden Taxes

Earlier when GST was not introduced, taxpayers and consumers were often in doubt about how much tax they are being charged in actual. Some retailers would be charging VAT which was payable to the State government and additionally charge Service Tax payable to the Central Government. With GST being introduced, this confusion no longer exists, and therefore consumers are aware of the actual taxes they are being charged and the breakdown of the same between Central and State governments. GST is transparent and has also reduced the number of indirect taxes.

2. Traders Go Digital

With the tax return filing process going digital and the imposed compliance requirement by GST, traders will have to upgrade and train themselves and their employees, stakeholders, vendors or any other party involved in their business.

3. The Rise in Prices

Earlier to the introduction of GST, a system called the cascading effect of taxes was largely in play. In this process, the retailer had to pay separate taxes at every level which would ultimately increase the price of the overall product. This move eventually gave way to inflation, and the consumer had to pay a much higher rate.

Now with GST, the burden has been equally divided between everyone, and therefore the end consumer doesn’t have to take the entire burden of the taxes charged.

4. Faster Deliveries

Before the introduction of GST, there was always a long line of trucks waiting at the State borders waiting for their border check passes to be cleared. Now with the introduction of GST which is a destination-based invoice, trucks don’t have to wait at the border, thus saving crores of rupees in lost time and delayed deliveries.

5. GST Rate Cut

After the introduction of GST into the economy, a lot of essential commodities on which the government earlier used to charge taxes has been categorized under the zero GST bracket. Items like vegetables and sanitary napkins are not tax-free and therefore come at a lower price than earlier.

Conclusion

There has been a huge economic shift in India in past one year after GST came in and the work is still in progress. It is therefore early to pass a verdict on its success. Many steps are being taken by the government for the convenience of the people and to provide better facilities to common people and business persons and many more economic reforms are yet to be mapped. This is a perfect time to explore new ways of doing business and mitigate the risks involved. There has been a revision in GST rates on several commodities and many other twist and turns in GST laws and processes are taking place. Summing up, it is going to take time before GST will take its final shape.

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