First and foremost, GST, which stands for Goods and Services Tax, is aimed to bring in an era of tax reforms through an affirmative action which entails removing all kinds of indirect taxes that are otherwise levied on manufacturers to consumers with one single tax, aka the GST.
In other words, GST envisions a structure wherein taxes are levied solely on the value addition at each stage. This in turn will help create a single tax structure, which in turn means the reduction of tax burden on consumers who were earlier falling prey to several indirect taxes. That is to say that consumers will now have to bear only the GST charged only at the last stage (i.e. on the value addition by the last dealer in the overall supply chain). Hence, the GST is not only good for the country, it is good for the consumers too. For it will finally help us achieve the long-sought goal of ’One Country, One Tax, One Market’!
Of course, the naysayers and Modi-bashers continue their rant against the implementation of GST. According to them, what possible benefit can there be by brining the entire country under a single taxation system?!? Indeed, why turn India into a single market?!? Why indeed!!!
Well, the benefits of GST are multi-faceted, be it for the businesses or the consumers or even the State. Let us therefore look at some of the benefits that GST will offer to each of these three entities:
THE STATE
- Easy to administer: Having a single tax system will make it easier for the government to compute and administer the tax.
- Prevention of leakages: Since the GST will replace the hidden indirect taxation, the government will be in a position to control the leakage in the system.
- Better revenue efficiency: Owing to the ease of administration and the prevention of leakages, the GST will provide better revenue efficiency to the government.
THE BUSINESS
- Ease in compliance: Having a single tax will help reduce the complexities of the tax system, making it easier for the business to ensure compliance, which in turn will ensure better transparency.
- Uniformity of tax rates: GST will also help bring in uniformity of tax rates for businesses across the country, which will help businesses in their operation…no matter what their location.
- No hidden costs: With GST being applied solely on the value added at a certain point of the value chain, it will help reduce hidden costs of doing business, which will certainly help bring in better competitiveness in the market.
THE CONSUMER
- Transparency in taxation: With a single tax structure, the consumers will no longer have to pay hidden taxes, which will also help usher in transparency for the consumers in the taxes paid by him.
- Relief from tax burden: The GST will not only help reduce the tax burden by eliminating hidden taxes, it will also ensure that consumers pay only for the value addition that happens at the last stage of the value chain. Thus, GST will ensure a stop to the current cascading effect of taxes, which are usually borne by the consumers. Hence, GST will help reduce the tax burden on the common public.
Moreover, GST will also bring more transparency and clarity to the taxes being paid, which will hopefully bring an end to otherwise painful litigation that had become inevitable owing to the inherent ambiguities, both in the tax structure as well as the legal provisions. Hence, an overhaul in the tax structure was a much-needed reform, that we have much to be thankful for!
