Mention the Importance and Impact of GST

GST or Goods & Services Tax is an indirect tax imposed on all goods and services in India. It is one of the biggest tax reforms applied to date to uniformly levy tax with the principle of—one nation, one market, one tax. It is the single biggest tax imposed on goods and services in India. The GST was rolled out in a single stroke, converting the Indian economy into a unified market. 

The Parliament of India passed the Goods and Service Tax Act on March 29, 2017, and it was incorporated by July 1, 2017. GST is a tax levied on goods and services imposed right from the manufacturer to the final consumer. There are more than 160 countries that have adopted this system of taxation. 

Types of Taxes in India 

There are two major types of taxes. These include – 

• Direct taxes in India

According to the Indian tax system, direct taxes are the ones that are imposed directly on an individual’s income. The payment of direct taxes cannot be transferred to another person or legal body. The Central Board of Direct Taxes oversees the direct taxes in India. Further, the direct tax is classified into six major categories. These include – 

• Income tax

• Corporate tax

• Wealth tax

• Gift tax

• Securities transaction tax

• Capital gains tax

• Indirect taxes in India

The next type of tax in India is an indirect tax. In India, indirect taxes are levied on items and services traded or sold by vendors. Under the Indian tax system, these taxes are collected by the vendors selling a particular service or commodity. The tax is added to the initial price of the goods or services, thereby increasing its final price. The types of indirect taxes in India are listed below. They are:

• GST

• Sales tax

• Customs duty

Explain the Tax Policy in India 

As per the taxation system of India, the Constitution of India has allowed the government to charge taxes to the people of the country based on their income bracket. The tax system allows ordinary taxpayers to plan their taxes and save money wherever possible. However, there are several cascading effects of taxes in India. 

Further, the tax collected from the country’s citizens is used to create revenue for public works projects and enhance the country’s economic standing. If a person decides to put money into a tax-saving instrument, they may be eligible for a tax break. 

Impact of GST on the Indian Economy 

Four years ago, the GST was imposed on all sectors of life. Everything you buy goods and services from the market, the final amount charged upon includes GST other than those which do not come under the purview of GST. Here are some of the significant impacts of GST on the Indian economy – 

• Simpler tax structure

With the introduction of GST, the taxation system has become much simpler. Since there is only one tax, the calculation is easier. As a result, the buyer gets a clear idea of the total tax paid by him. 

• More funds for production

Another major impact of GST on the Indian economy is more funds for production. The total taxable amount has been reduced drastically, which fosters production. 

• Increased volume of export

When talking about the impact of GST on the Indian economy, custom duty on the export goods has reduced drastically. As a result, the production units save a lot of money during the production and shipment of goods. 

• Support for small-size enterprises 

GST is implied based on the size of the enterprise and the annual turnover. If the annual turnover of an organisation is 50 lakhs, it will pay 6% GST. 

• Enhanced operations throughout India

With a single and unified taxation system in the country, it is easier to transport goods in India. As a result, boosting transportation operations has increased.

What is the Significance of GST?

GST is supposed to bring many benefits to the people and the overall Indian economy. The primary objective of GST is to reduce corruption and sale without a receipt. Apart from this, the following are certain other objectives: 

• Improved Tax Compliance

It’s been four years since the GST came into the picture. It has helped achieve better tax collection by combining different taxes and lowering the overall tax burden.

• An Automated Ecosystem of Tax 

GST assisted the country in making the shift to an automated indirect tax system. With the advancements in technology, everything is now online. Starting from electronic compliance forms and e-invoices to tracking the movement of products via e-waybills, everything is possible with just a click. 

• Improved Choices 

Since the GST rate for a given supply (service or product) is the same across the country, traders and manufacturers from the organised sector have more freedom to select suppliers, stakeholders, and vendors, who offer better deals.

Conclusion 

On July 1, 2017, India introduced GST, making it applicable to the entire nation. It is a multi-stage, destination-based tax and is comprehensive because it includes nearly all indirect taxes, except a few state taxes. The Goods & Services Tax (GST) is an indirect tax on India’s supply of goods and services. It is a value-added tax applied on most products and services sold in the market. It is a tax paid by consumers to the government through businesses that sell products and services.