Benefits of Goods and Services Tax
- On February 15, 2020
- GST, GST Act, GST Blog, GST News, GST Offences, GST Regulation
Since, its conception in 2017, Goods and Services Tax has been the topic of debate for many. Some criticise it, some blame it for the low GDP rate, some are still sceptical of its usage and some are neutral. So, here we are to talk about its benefits, yes you read it right, there are a lot of benefits of GST and we are going to let you know them. Let’s get started without further ado!
The benefits of GST can be summarized as mentioned below:-
- Perks of GST for business and industry –
- Easy compliance: A robust and comprehensive IT system is the core foundation of the GST regime in India. Henceforth, all the taxpayer services such as registrations, returns, payments, etc. are available to the taxpayers online, which make the compliance pretty easy and transparent.
- Removal of cascading: GST is providing a reduction in the hidden costs of doing business. Developed as a system of seamless tax-credits throughout the value-chain, and across boundaries of States, it ensures that there is minimal cascading of taxes.
- Uniformity of tax rates and structures: GST has increased the ease of doing business and certainty by ensuring that indirect tax rates and structures are common across the country. Basically, GST has made business in the country tax neutral, irrespective of the choice of place of conducting business.
- Gain to manufacturers and exporters: GST has reduced the cost of locally manufactured goods and services which in turn has increased the competitiveness of Indian goods and services in the international market and giving a boost to Indian exports as the compliance cost has been reduced due to GST.
- Improved competitiveness: Due to the introduction of GST, there has been a significant reduction in the transaction costs of doing business which has eventually lead to an improved competitiveness for the trade and industry.
- Perks of GST for Central and State Governments –
- Better controls on leakage: GST has resulted in better tax compliance due to a strong IT infrastructure. And the seamless transfer of input tax credit (ITC) from one stage to another in the chain of value addition, there is an in-built mechanism in the design of GST that has incentivized tax compliance by traders.
- Simple and easy way to administer: Multiple indirect taxes at the Central and State levels have already been replaced by GST. With a strong end-to-end IT system, GST has made it simpler and easier to administer it than all other indirect taxes of the Centre and State that had been levied so far.
- Higher revenue efficiency: GST has resulted as an effective measure in decreasing the cost of collection of tax revenues of the Government, and, therefore, has lead to higher revenue efficiency.
- Perks of GST for the consumer –
- GST turn out to be a transparent tax proportionate to the value of goods and services: GST has helped in removing the hidden tax on the commodities which has made transparency possible between the manufacturer and consumer, leading a way of paying one tax to the final consumer.
- A big relief in overall tax burden: Due to the efficiency gains and prevention of leakages, the overall tax burden on most commodities have come down benefitting the consumers.
These were some benefits of GST categorised for better understanding. There are a lot more and we will let you know about them.
For more information on GST, stay tuned!
