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Benefits of GST

GST is the single tax system adopted by the Indian government on 1 July 2017. The percentages of taxes are 0%, 5%, 12%, 18% and 28%. It brings benefits to all the stakeholders’ viz. industry, government and the citizens. It is expected to lower the cost of goods and services, boost the economy and make the products and services globally competitive. GST intent to make the India a common market with unique tax prices processes all over the country to eliminate the economic differences.

By subsuming most of the Central and State indirect taxes into a single tax and by allowing a set-off of prior-stage taxes for the transactions across the entire value chain, GST would mitigate the ill effects of cascading and thereby improve our competitiveness. GST is a destination based consumption tax. It has been designed in a manner so that tax is collected at every stage and the credit of tax paid at the previous stage is available to set off the tax to be paid at the next stage of transaction there by eliminating cascading of taxes. This eradicates “tax on tax” and allows cross utilization of input tax credits which benefit the industry by making the entire supply chain tax neutral.

GST is a destination based consumption tax. It has been designed in a manner so that tax is collected at every stage and the credit of tax paid at the previous stage is available to set off the tax to be paid at the next stage of transaction there by eliminating cascading of taxes. This eradicates “tax on tax” and allows cross utilization of input tax credits which benefit the industry by making the entire supply chain tax neutral.

GST will give a major boost to the ‘Make in India’ initiative of the Government by making goods or services produced or provided in India competitive in the national and international markets. Further, all imported goods will be charged with integrated tax (IGST) which will be more or less equivalent to Central GST + State GST. This brings parity in taxation on local and imported products. Under the GST regime, exports will be zero rated in entirety unlike the present system where refund of some taxes is not allowed due to fragmented nature of indirect taxes between the Centre and the States. All taxes paid on the goods or services exported or on the inputs or input services used in the supply of such export goods or services shall be refunded. The principle of exporting only the cost of goods or services and not taxes would be followed. This will boost Indian exports thereby improving the balance of payments position. Exporters will be facilitated by grant of provisional refund of 90% of their claims within seven days of issue of acknowledgement of their application, thereby resulting in the easing of position with respect to cash flows.

GST is expected to bring buoyancy to the Government Revenue by widening the tax base and improving the taxpayer compliance. GST is likely to improve India’s ranking in the Ease of Doing Business Index and is estimated to increase the GDP by 1.5% to 2%. GST will prevent cascading of taxes by providing a comprehensive input tax credit mechanism across the entire supply chain. Such a seamless availability of Input Tax Credit across goods or services at every stage of supply will enable streamlining of business operations

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