Once the proposed Goods and Service Tax aka GST is implemented in India, it will invariably replace all indirect taxes levied on goods and services by the Government. Irrefutably, GST will be one of the major tax reforms to ever take place on Indian soil, once implemented.
With the objective to create a uniformed way of doing business in India, the Goods and Service Tax (GST) was proposed. As per Morgan Stanley, an implementation of GST will ease the way businesses are done in India. The GST in India is perceived as one of the best and most far-reaching indirect tax reforms that the country has ever seen. Clearly, the experts reckon that the GST will prove to be a profoundly significant breakthrough for all players wishing to pursue commercial interests in the Indian market.
Below mentioned are some of the most clear-cut advantages of GST Bill.
Take a look to know more about these anticipated benefits!
1 Integration of taxes
First and foremost, in the GST system, the visible tax burden will be split equitably among the manufacturers and services. Unlike the present taxation system where separate taxes for goods and services require a division of transaction values as per the values of goods and services for taxation purpose leading to unneeded complications. All these will stop. GST is likely to replace 17 indirect tax levies. Multiple taxes such as central sales tax, state sales tax, entry tax, turnover tax, octroi tax, license fees, and so forth will be all brought under the GST.
GST will be levied only at the final stage of consumption based on the VAT principle and not on various stages unlike now. In a nutshell, the GST will play a pivotal role in eliminating varied economic distortions and help in building a hassle-free taxation regime in the country.
2 Bring down corruption
Not only will the GST help in developing a common trade market, it will also help in building a transparent and corruption-free tax administration in the country.
3 Help in boosting economic growth
As per economic experts, the implementation of GST will help India gain approximately $15 billion a year as GST bill will promote more exports, aid in lifting the employment figures of the country, and augment the overall economic growth of the country.
4 Benefit citizens
Under the GST bill, ordinary citizens of the country are also likely to benefit as they will now have to shell out less money for manufacturing goods that they will buy. In the GST system, taxes for the Centre and State will be collected only at the point of sale and both will be charged on the manufacturing cost. Unarguably, individuals are going to benefit from these taxes as prices will fall down remarkably and lower prices will increase an overall consumption rate of the country, leading to heavy production of goods, and hence creating a win-win situation for both, companies and individuals.
5 Good news for real estate
Lastly, and most importantly, GST brings in some good news for the real estate industry of the country too.
Presently, the real estate industry has two primary levies: Service Tax and VAT. Thanks to the overlapping of taxes and an uncertain change in rate of taxes, many developers across the nation have indulged in unethical practices. However, with the implementation of GST Bill comes into practice, all these will issues will be put to rest. With GST, the nation will witness a uniformed industry practices across the country. Hence, the taxes paid by home buyers across all states of the country will be more or less the same.
In addition, the proposed GST will also replace all the multiple taxes with a single tax and ensure a quick and smooth flow of credits through the chain.
A dual GST system is planned for implementation, which means the GST will be divided into two broad categories:
- State Goods and Service Tax (SGST)
- Central Goods and Service Tax (CGST)
The GST rate is anticipated to be around 14-16 per cent. And once the combined GST rate is fixed, all the states and the Centre will decide on their SGST and CGST rates respectively.