Essay Writing: Will Goods and Services Tax (GST) be a boon for Indian economy?

By Saurabh Singh|Updated : July 2nd, 2017

Will Goods and Services Tax (GST) be a boon for Indian economy?


Is GST going to be a boon or bane for India?


Midnight makeover: adoption of GST


Entering the age of GST



Hindi Sources:

आज से हो गया 'एक देश एक कर', लेकिन कुछ देशों के मुकाबले देना होगा अधिक GST


संपादकीयः जीएसटी का जश्न






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PadminiJul 2, 2017

When we see the tax structure of India,we can see that india has well defined tax structure.
Taxes are levied both on central and state level. And few minor taxes are also levied on local level such as municipality tax.
Tax Structure In India:
The over all tax system of India is divided into two parts.
1) Central tax
2)State tax
Central Tax : the central tax of India has been divided into two parts that is
!) Direct Tax 2) Indirect Tax
Direct tax mostly involved "Income Tax"and is governed by Income tax Act and Wealth Tax.Act.
Indirect is tax levied on services. Provided except in jammu and kashmir. The another Type
of Tax is "Excise and custom" tax. Excise tax is imposed on the goods which are produced in india and " Custpm tax" is omposed on the goods which are imported into the country.
The tax structure which is prevalent now seems complicated and toilsome. That is why, in august 2016 the narendra Modi government has proposed the idea of "GST".
What is GST ?
This is a taxation system which will be used to merge all the indirect taxes which are
present now. There will be only one tax rate for the goods and services through out the nation.
The motto of this scheme is " one nation ,one rate".
The current tax rate is 40-47%. But after the implementation of GST ,it will be around 20- 22%.
When we see from a consumer's perspective , he has to pay taxes on different levels with different rates and the consumer ends up paying more that what is the actual cost of the
product . Due to implementation of " GST" , the consumer will not have to pay extra
Advantages of GST:
1) consumer will be benefited :
As mentioned above, the consumer need not to pay any extra amount for the purchase of
any goods or availing any service, So, this will make the cost of the goods/services cheaper
for the customer.
2) Industrial Development:
India is famous for its complex taxation system and complicated process for the
establishment of any small or medium industry. The one tax rate at all the level will make
the process much easier. The easy establishment of Industries will leadto economic developement.
3) will be beneficial for Automobile Industry :
Maruti Suzuki,Eicher Motors ,Bajaj Auto ,Hero motocorp are few of the automobile
companies which are going to be benefited from this move.
4)Both the organised and unorganised labour markets are going to benefited due to the
implementation of GST.
Disadvantages of GST:
1)Increase in operation cost:
operating cost is the cost which is associated with the operation of equipments and manpower
of a business. Due to the implementation of GST, there will be an increase in that cost.
2) Need for individual registration in different states :
GST needs to be registered in different states . Which will make the process more
troublesome and time taking.
3) Increase in taxes will increase the price :
many sectors are exempted from GST and in few (those who offers services) ,it is going to
be imposed. Which in results will increase the the cost.
After analysing both the pros and cons of the implimentation of GST, we can figure out that, indeed it is going to be a good step by the government. The normal citizn of India is going to be benefited from this . The goods and services will b available at low cost. Over all, it
will be a major step for the upliftment of economic standard of India. And the time is not far ,when  the nation will appreciate the government for taking such step.�
Aakanksha Berwal
Government of India has lately cleared the GST( Goods and service Tax) Bill. Goods and service tax is one Indirect tax for the whole country. GST levied by government as Central GST for government, State GST for the states is nothing but fantasy terms representing older terms like VAT, Sales Tax and CST in a new way.
GST will turn India into one common market, leading to greater ease of doing business and big savings in logistics costs from companies across all sectors. Some companies will gain more as the GST rate will be lower than the current tax rates they pay, others will lose as the rate will be higher than the present effective rate.
It has been host to many speculations as to what all items will come under its ambit. What would be the proposed tax rate? Who are going to be its beneficiaries? To elucidate its working, GST will be divided under four tax slabs of 5%, 10%, 18% and 22%. It will be a single tax consumer will be supposed to pay once the actual consumption takes place. GST in fact, is a confusing term, where double tax is going to be charged in the name of single tax.
In India, the GST model will be “dual GST” having both Central and State GST component levied on the same base. All goods and services barring a few exceptions will be brought into the GST base. It will be headed by The Finance Minister (MoF).
GST will turn India into one common market, leading to greater ease of doing business and big savings in logistics costs from companies across all sectors. Some companies will gain more as the GST rate will be lower than the current tax rates they pay, others will lose as the rate will be higher than the present effective rate.
GST is beneficial not only for the business and industry, but also for the government and consumers. Here, we bring the ten benefits of Goods and Service Tax (GST).
1. Easy compliance
2. Uniformity of tax rates and structures
3. Removal of cascading
4. Improved competitiveness
5. Gain to manufacturers and exporters
6. Simple and easy to administer
7. Better controls on leakage
8. Higher revenue efficiency
9. Single and transparent tax proportionate to the value of goods and services
10. Relief in the overall tax burden
Hence,this is possible only if the benefit is actually passed on to the consumers.There are other factors also like the sellers profit margin that determine the final price of goods.GST alone does not determine the final price of goods.
Some negative aspects of GST:
1.Transactions fees in financial services are likely to become more expensive after the government has put these under the 18% tax bracket in the new goods and services tax (GST) regime.
2.India is amongst the most under penetrated Insurance market (less than 10% population of India has Insurance). This was the reason for the government launching the ‘Pradhan Matri Jeevan Beema Yojna’. However, with GST roll out insurance premiums have become more expensive which can be a temporary roadblock in a price sensitive market like India.
3.The telecom sector is already under sever debt and burden of liscence fee.With GST the taxes on telecom services will further increase.
4.The Banking & Financial Sector might take a hit as currently the effective tax rate in the sector is 14 per cent, which is levied only on fee component (and not interest) of the transaction.
In terms of growth, price, current account and budget balance, the macroeconomic impact of a change to the introduction of the GST will be significant. With a burgeoning services sector and a high economic growth trajectory that India is in today, a shift in income based tax to consumption based tax is going to provide substantial fillip to source of revenue. Of course, there will be a short lived limited price impact on the larger economy with introduction of GST. However, a larger impact is expected on the administrative compliance cost of GST which is likely to increase tax revenue from the “parallel” or “black” economy. Approximately in 140 countries, GST has already gained a foothold. On the whole, GST will be a huge step towards making India a Skilled India. It would be most advantageous to the common man, once put into action. There will hassle free movement of goods. Tax base will widen. The system will be more transparent and less opaque.
Sachin Mishra
Indian economy as India's culture has a diversified range. don't get confused I just mean to say that we have a mixed economy.. and that's why for whole world its a business heaven...
Now when we talk about taxation system so it's a very well known fact that till now most of the businesses had the habit of tax abstraction. And I think that's one of the reason behind so much of protest against Gst.
Well when it's come to tell weather this new way of paying indirect tax would be a boon or curse.. so still I have a mixed approach.. why I am telling this their are two logic behind it..
1. (Why gst is a boon) goods and services tax will widened the tax net.. and put transparency in the system..
2.(reason behind it could become a curse) this decision was taken in hoch-poch without spreading proper awareness for business personnels and proper implementation is yet to be a game of throne.
Pros and cons of gst:-
Expansion of tax net, demolish arbitrary system of taxation, increase gdp of nation in long term, will finish stocking methodology of business persons, abolition of 24 indirect taxes which will decrease inflation at par, supervision of gst council will keep a check on all business personnels and ornization who are under gst net.
Lack of  awareness and information in business heads, diversity of states a big challenge, sudden decision before pilot period , fear of penalties and imprisonment for little mistakes under business personnels, not a system like name suggest one tax one nation.
Conclusion:- few major decision like nationalization of banks in 1969, demonatization in 2016 played a major role as per indian economy. Hence this historic decision of GST which is followed by almost 155 nations across the world may play a game changing role.. if implemented with a bit caution.. because it is said that
"Precaution is better than cure"
Thank you

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