The introduction of GST certification by the government in the Indian economy came with the notion of “One Country, one market and one tax.” The idea of implementing the tax was introduced long before, and it took 17 years for the tax to get executed in India. After the tax was added, other indirect taxes got levied, and it became smooth and less complicated for the businesses to embrace the new taxation law into action.
The Indian economy expected to get a win-win situation and to regain the momentum while widening the economy. The certainty of the expectations will be decided after analyzing how the Indian government is trying to make GST impact on the Indian economy to be a “Good and Simple Tax” for the taxpayers. The manufacturers and the traders are also benefited as they needed to file for only a few taxes after the GST got introduced. There is also increasing transparency and revenue in businesses. Bookkeeping has also become easier for businesses. But how GST has impacted the Indian economy, let’s have a look.
THE SHORT-TERM GST IMPACT ON INDIAN ECONOMY
Now if we see the story from the side of the consumers after the GST got launched and introduced, they now need to pay more taxes for more goods and services they will consume. There is also a slight increase in the amount of tax that the consumers need to pay in everyday consumables. The GST return has also come up with the added cost of compliances along with it. That cost of compliance can seem to be high for small manufactures; thus, the rates they offer can be higher than before.
BUT WHAT IS THE EFFECT OF GST ON INDIAN ECONOMY 2019?
Though the new implementation of the law has changed so many things to some extent. It might also take specific time for everything to fall in places and to cope with the newly introduced Goods and Services tax. But whatever it may, there is one thing we must be sure about is that whatever are the changes taking place in the India economy also have long term and future goals. The immediate impact can be different or equal wit the future implications.
If we can discuss a little further towards the future of the GST impact on India economy and implementation, then we can understand that the purpose of GST is not only to lower the taxes, but also to decrease the tax slabs. Any country for whom the Goods and Services Tax has become a source of reformation of their economy has a maximum of three rates including the lower rate for essentials, mean rate and higher tax rate for luxurious merchandises.
Currently, in India, we have 5 tax slabs. Apart from the 3 previously mentioned tax rates, we have other tax rates like the central rate, state rate, and the integrated rate. The fear of losing the revenue the government was not able to lower or fewer some of the tax rates. The government has also promised that once the neutral revenue rate is reached, the tax rates will be revisited.
The GST impact on GDP for the long term in the economy seems to be very positive. The cascading effect will get reduced, and so will be inflation. The FDI will be increased, and the export rate will also grow in the country. The industry leaders believe that the GST impact on Indian economy will be a great support to climb several ladders and GST will be reform the history of the Indian economy.
The government needs to build the capacity of affordability for the small and medium enterprises to be able to pay the GST. To reduce the negative impact of GST on the Indian economy, the overall compliance rate needed to be decreased, new ways are needed to be found. Necessary changes must be done and the taxation must be made easy and straightforward for all. The GST will be a strong element in the reformation of the Indian economy once the entire nation tries to make it successful.