The concept of goods and service tax (GST) and its impact on indian economy

Abstract

Goods and Services Tax (GST) is a comprehensive tax levy on manufacture, sale and consumption of goods and services at national level. Goods and Services Tax integrates State economies and boost overall growth. Currently, companies and businesses pay lot of indirect taxes such as VAT, service tax, sales tax, entertainment tax, octroi and luxury tax. On GST implementation all these taxes cease to exist. There is only one tax, that too at the national level, monitored by the central government. GST is levied at the final point of consumption and not at the manufacturing stage. Previously, separate tax rates are applied to goods and services. Under GST, there is only one tax rate for both goods and services. The goods and services Tax is an improvement towards a comprehensive indirect tax reforms in the country. Integration of goods and services taxation would give India a world class tax system and improve tax collections. It would end distortions of differential treatments of manufacturing and service sector. GST is expected to create a business friendly environment and hence inflation rates would come down overtime as a uniform tax rate is applied. It will also improve government's fiscal health as the tax collection system would become more transparent, making tax evasion difficult. This paper is a study of the concept of goods and service tax and its impact on Indian economy. It also aims to know the advantages and challenges of GST in Indian scenario