Let us have a look-
Increasing CompetitivenessOne of the biggest impacts of GST has been on the competitiveness between manufacturers and service providers. Studies suggest that the tax component on manufactured goods and services is about 30% of the final price of the product. GST has eliminated the cascading effect of taxation, reducing tax liability in most industrial sectors. This has helped in reducing the overall cost of goods and services. With more tax savings, the production can be increased, and it paves the path for healthy competition. Moreover, this also aids in improving the reputation of Indian goods and services in the international markets, further boosting the economy.
Reduced Tax EvasionA significant sign of an improving economy is increasing government spending. The annual government spending in India is consistently growing, allowing the country to grow and develop further. One of the biggest reasons for the same is reducing cases of tax evasion. The impact of GST on tax evasion has been massive. As GST is an online taxation system, it brings in more transparency to the entire taxation process. The GST collection has been mostly able to meet the pre-set targets, making it safe to assume that GST implementation has been successful in the country.
Future ChallengesWhile the benefits of GST can already be witnessed in the country, there are still a few roadblocks to help the tax regime deliver improved results. Some of the biggest ones are-
- Reducing GST tax rates
- Lack of IT infrastructure
- Amendments to levy GST on imports
The Road AheadThe tax regime as extensive as GST will need some time to meet the expectations of the consumers and the industries. While there still are a few major barriers, efforts are already in place to eliminate them and allow the Indian economy to experience the true benefits of a unified tax system.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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