Since the last two decades, India has been taking various approaches to reform her fiscal program to gain momentum in expanding the economy. Thus, important steps should have been taken to reduce the tax burdens of both companies and consumers and to take some initiatives to remove multiple taxes at each stage of a supply chain. In India, total tax percentage due to multiple taxes against each product is approximately 25-30% of the cost of the product. To reduce the tax burden and the number of payable taxes, following the notion of “one nation, one tax”, a single tax structure has been implemented on 1st July 2017. This is known as Goods and Services Tax or GST.
IMPACT OF GST ON FAST-GROWING INDIAN ECONOMY
India is the nation of around 1.3 billion citizens and she has the economy of a huge $2.4-trillion. So, any significant change in the tax structure of service and trading will have both short and long term impacts on the economy.
SHORT TERM IMPACT
As the total burden of taxes has become low, the prices have gone down at various stages of a supply chain. Thus, production has increased and so as competition.
GST Filing is an easy online process. Calculation of GST is simpler because you don’t need to calculate multiple taxes. You can save your excess time and money.
As the GST system is a single uniform taxation structure, manufacturers, dealers, retailers and other persons of a supply chain easily transport goods without paying any extra tax.
Transportation costs for flights, railways, trucks, cabs etc., have also been reduced due to GST.
Due to GST, only a single tax is paid instead of multiple taxes which decreases production cost. This encourages in more production of goods, and the government now earns more through GST.
Due to the drop in the cost of productions in the domestic market, the volumes of exports of different goods have increased a lot. Thus, the fiscal deficit is getting reduced and the economy is now much healthier than before.
LONG TERM IMPACT
GST has proposed five tax slabs and their rates are rational. So, the government has the option to put the most essential commodities for common people under the tax slabs of lower rates.
GST has eliminated multiple taxes which may result in a low amount of payable tax, increased production, reduced paperwork, transparent rules and easy bookkeeping.
All of these may increase volumes of sales and can generate more revenue and investments.
All of these may increase volumes of sales and can generate more revenue and investments.
At Synesis Consulting And Tech Solutions Pvt. Ltd., we provide the services of GSP, so that you can easily offer online GST services to your customers.