How GST Bill Will Benefit Local People: An In-Depth Analysis

The Goods and Services Tax (GST) is a significant unified tax reform in India that aims to simplify the tax landscape, benefiting both businesses and consumers. As a destination-based tax system, GST simplifies the tax procedures and enhances ease of doing business.

Benefits for Consumers and Businesses

One of the key benefits of GST is its ability to reduce the cost of goods and services. This is due to the elimination of cascading effects, where taxes are levied multiple times at different stages of the supply chain, leading to increased prices for consumers. Under the GST regime, the tax burden on sellers is reduced, leading to price reductions for consumers and increased liquidity in their hands. For example, in the pre-GST era, the tax burden on drugs was around 13%. Post-GST, most life-saving drugs fall into the 5% tax slab, making them more affordable for the general public.

Wider Economic Impact

Beyond individual consumers, GST also has a broader economic impact. It simplifies the tax system, reduces compliance burden, and enhances transparency. With a single tax framework, the overall tax system becomes more efficient, leading to better cash flows and improved working capital management for businesses. This, in turn, boosts the Indian economy and makes goods and services produced in India competitive in both national and international markets.

Export Boost and Balance of Payments

The GST regime significantly aids in exports. Unlike the pre-GST system, where the refund of taxes on exports was fragmented and delayed, GST ensures that exports are zero-rated, facilitating faster and smoother exports. This will boost Indian exports in the international market and improve the country's balance of payments. Additionally, exporters with a clean track record will be rewarded with immediate refunds of 90% of their claims arising from exports within seven days.

Increased Government Revenue and Ranking Improvement

Another major benefit of GST is its expected enhancement in government revenue. By widening the tax base and improving taxpayer compliance, the GST is likely to contribute to increased GDP growth by 1.5 to 2 percentage points. This tax reform also brings more transparency to indirect tax laws, making it easier for the government to verify the correctness of taxes paid and for consumers to understand the exact amount of taxes they are paying.

Easier Record Keeping and Compliance

Under the GST regime, taxpayers are no longer required to maintain records and show compliance with a myriad of indirect tax laws from the Central and State Governments. Instead, they need to maintain records and show compliance in respect of Central Goods and Services Tax Act and State or Union Territory Goods and Services Tax Act for all intra-State supplies, which are almost identical laws. For inter-State supplies, Integrated Goods and Services Tax applies, further simplifying the tax procedure.

Conclusion

The implementation of GST brings a plethora of benefits, from reducing the cost of goods and services to enhancing economic competitiveness and improving government revenue. The simplified and transparent tax system aids not only businesses but also local people by making essential goods and services more affordable and accessible. Through these measures, GST aims to create a unified and integrated economy, paving the way for long-term economic growth and development.