Who will Benefit from GST Implementation in India?

To date, the Goods and Services Tax (GST) implementation in India has not brought the immediate and direct benefits to all sectors as initially envisaged. While the GST system is designed to reduce tax rates and create a more unified tax structure, several challenges, such as higher product prices and fraudulent activities, have arisen. However, with ongoing and strict monitoring from the Revenue and Anti-Profiteering Committee, we can expect to see the benefits of GST becoming more apparent in the near future.

Benefits to the Government

The government's aim is to create a unified national market, bolster foreign investment, and drive the "Make in India" campaign. GST has the potential to:

Create a unified common national market for India, enhancing foreign investment opportunities and promoting the "Make in India" initiative. Avoid cascading of taxes through Input Tax Credit availability across goods and services at each stage of supply. Harmmonize laws, procedures, and tax rates, leading to better compliance and reduced evasion. Boost export and manufacturing activity, generating more jobs and increasing GDP, leading to economic growth. Reduce poverty by increasing employment opportunities and financial resources. Further reduce taxes, especially for exports, making Indian products more competitive globally and promoting Indian exports. Improve the overall investment climate, benefiting development in states. Eliminate incentives for tax evasion by reducing rate arbitrage between neighboring states and between intra and interstate sales. Reduce the average tax burden on companies, lowering prices, and promoting consumption and production growth, aiding in the growth of industries and establishing India as a manufacturing hub.

Benefits to Traders

Traders will also see significant advantages with the advent of GST due to its simplified structure. These include:

A fewer number of exemptions in the simpler tax regime. Reduced complexity and simplification in the indirect tax system. Reduced compliance costs with automated processes for various procedures such as registration, returns, refunds, tax payments, etc. Interactive processes through the common GSTN portal, reducing public interface issues between taxpayers and tax administration. Improved compliance with all returns and input credits being filed online, encouraging a more paper trail. Uniform procedures, reduced scope for evasion, and greater certainty in the tax system. Timelines for important activities such as obtaining registration and refunds, enhancing efficiency. Electronic input tax credit matching across the country, enhancing transparency and accountability.

Benefits to Consumers

Consumers should notice a reduction in the final price of goods due to a seamless flow of input tax credit through the entire supply chain. Key benefits include:

Lower prices for goods expected as a result of the reduced tax burden on companies. Exemption or very low tax rates on a significant segment of small retailers, reducing costs for consumers purchasing from these retailers. A reduction in the average tax burden on companies, leading to lower prices and increased consumption.

Conclusion

The GST initiative has multiple facets that can benefit the government, traders, and consumers. While the transition period has seen its share of challenges, the stringent monitoring and the expected reforms will pave the way for long-term benefits. As the system matures, stakeholders can anticipate improved economic growth, increased compliance, and a more efficient tax collection system in India.