Goods and service tax (GST)
The GST is a new concept that simplifies the giant tax structure by supporting and enhancing the economic growth of a country. It is a comprehensive term levy on manufacturing, sale and consumption of goods and service at a national level.
Goods and service tax bill or GST also referred to as the constitution (one hundred and twenty-second Amendment) bill 2014 initiate a value added tax to be implemented on national level. In India, GST will be an indirect tax at all the stages of production to bring about uniformity in the system.
Positive impact of GST on India’s GDP
A comprehensive and robust tax structure that will bring the current set of indirect taxes like VAT, sales tax, excise duty etc. under one umbrella and will be instrumental in creating a seamless experience across all states. By bringing the varied tax structures under one net, it is also expected to reduce the cost of transaction for various business entities that had to comply with multiple taxes. We are well aware of the fact that transport and logistics industry is pivotal to the growth of Indian economy as there are lot of products that are delivered from one part of the country to another on a daily basis. So, it is assumed that implementation of a decent GST structure will eliminate other taxes and the export of goods and services will become economical.
Negative impacts of GST
There can be no gain without pain and that may be especially true when it comes to GST. As about 160 countries overhauled their indirect tax systems, they confronted numerous challenges. Latecomer India is unlikely to escape some havoc.
- Service tax rate 15% is presenting charged on the services, so, if GST is introduced at a higher rate which is likely to be seen in near future, the cost of services will rise. In simple words, all the services like telecom,, banking, airlines, etc will become expensive.
- Increased cost of services means an add to your monthly expenses.
- You will have to reschedule your budget to bear additional tax
- Increase in inflation might be seen initially
- Being a new tax, it will take some time for the people to understand it completely, its actual implications can be seen only when the rate of tax is determined.
- If the actual benefit is not passed to consumer hand then the seller increase his profit margin, the prices of goods can also see a rising trend.
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