BENEFITS OF GST

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Benefits to economy
1. Creation of unified national market: GST aims to make India a
common market with common tax rates, procedures and removes the
economic barriers thus paving the way for an integrated economy at
the national level.
2. Boost to 'Make in India' initiative: GST gives a major boost to
the 'Make in India 'initiative of the Government of India by making
goods and services produced in India competitive in the national as
well as international market.
This will create India as a Manufacturing hub.

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3. Enhanced investment and employment: The subsuming of major
Central and State taxes in GST,
 complete and comprehensive setoff of input tax on goods and
services and
 Phasing out of Central Sales Tax (CST) reduces the cost of locally
manufactured goods and services.
 It leads to increase in the competitiveness of Indian goods and
services in the international market and
 It gives boost to investments and Indian exports.
 With a boosting in exports and manufacturing activity, more
employment is generated and GDP is increased.

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4. Certainty in tax administration: Common system of
classification of goods and services ensures certainty in tax
administration across India.
5. Automated procedures with greater use of IT: There are
simplified and automated procedures for various processes such as
registration, returns, refunds, tax payments.
 All interaction is through the common GSTN portal, therefore, less
public interface between the taxpayer and the tax administration.
6. Reduction in compliance costs: The compliance cost is lesser
under GST as multiple record-keeping for a variety of taxes is not
needed.
 Therefore, there is lesser investment of resources and manpower in
maintaining records.
 The uniformity in laws, procedures and tax rates across the
country goes a long way in reducing the compliance cost.
7. Simple and easy to administer: With the replacement of multiple
indirect taxes at the Central and State level along with robust end to
end IT system, GST would be simpler and easier to administer.
8. Better controls on leakage: GST will result in better tax
compliance due to a robust IT infrastructure.
 Due to the seamless transfer of input tax credit from one stage to
another in the chain of value addition, there is an inbuilt mechanism
in the design of GST that would incentivize tax compliance by
traders.
9. Higher revenue efficiency: GST is expected to decrease the cost of
collection of tax revenues of the Government, and will therefore, lead
to higher revenue efficiency.
10. Expansion of tax base: GST expands by levying tax to the entire
supply chain from manufacturing to retailing.
11. Benefit to consuming States: As GST is being destination based
consumption tax, it favours consuming States.
12. Unorganized sector is regulated under GST: In the pre-GST
era, it was often seen that certain industries in India like construction
and textile were largely unregulated and unorganized.
 Under GST, however, there are provisions for online compliances
and payments, and for availing of input credit only when the
supplier has accepted the amount.
 This has brought in accountability and regulation to these
industries.
13. Transparency: The complexity of the present indirect tax
structure prevents transparency.
 GST being a uniform tax system, it would yield the necessary
information to the end consumers and help create a transparent
environment.
Benefits to Business and Industry
1. Benefits to agriculture and Industry: GST has given more relief
to industry and trade through a more comprehensive and wider
coverage of input tax credit and subsuming of several Central and
State agriculture taxes in the GST.
 The transparent and complete chain of set-offs which results in
widening of tax base. Better tax compliance also leads to lowering
of tax burden on an average dealer in industry, trade and agriculture.
2. Mitigation of ill effects of cascading: By subsuming most of the
Central and State taxes into a single tax and
 by allowing a set-off of prior-stage taxes for the transactions across
the entire value chain,
 it helps in mitigating the ill effects of cascading and thereby
improving competitiveness and liquidity of the businesses.
3. Benefits to small traders and entrepreneurs: GST has increased the threshold
for GST registration for small businesses.
 Further, single registration is needed in one State.
 Small businesses have also been provided the additional benefit of composition
scheme.
 With the creation of a seamless national market across the country,
small enterprises have an opportunity to expand their national footprint with
minimal investment.
4. Easy compliance: A robust and comprehensive IT system would be the
foundation of the GST regime in India.
 Therefore, all procedures such as registrations, returns, payments, etc.,
 would be available to the taxpayers online, which would make compliance easy
and transparent.
5. Uniformity of tax rates and structures: GST will ensure that Indirect Tax rates
and structures are common across the country, thereby increasing
certainty and ease of doing business.
6. Improved competitiveness: Reduction in transaction costs of doing
business would eventually lead to an improved competitiveness for the trade
and industry.
7. Gain to manufacturers and exporters: The subsuming of major Central
and State Taxes in GST, leads to complete and comprehensive set off of
input goods and services.
 Phasing out of Central Sales Tax (CST) will reduce the cost of locally
manufactured goods and services.
 This will increase the competitiveness of Indian goods and services in the
international market and give boost to Indian exports.
 The uniformity in tax rates and procedures across the country will also go
a long way in reducing the compliance cost.
8. Ease of doing business: Simpler tax regime with fewer exemptions
along with reduction in multiplicity of taxes under GST has led to
simplification and uniformity.
 Uniformity in laws, procedures and tax rates across the country
makes the doing business easier.
9. E-Commerce operators no longer suffer from differential
treatment: Earlier to GST regime, supplying goods through e-
commerce sector was not defined.
 It had variable VAT laws.
 Let us understand with an example:
 Online websites (like Flipkart and Amazon) delivering to Uttar Pradesh had to
file a VAT declaration and mention the registration number of the delivery truck.
 Tax authorities could sometimes seize goods if documents were not produced.
 Again, these e-commerce brands were treated as facilitators or mediators by
states like Kerala, Rajasthan, and West Bengal which did not require them to
register for VAT.
 All these differential treatments and confusing compliances have been removed
under GST.
 GST has clearly mapped out the provisions applicable to the e-commerce sector
and since these are applicable in India,
 there should be no complication regarding the inter-state movement of goods any
more.
10. Improved efficiency of logistics: Earlier, the logistics industry in
India had to maintain multiple warehouses across states to avoid the
current CST and state entry taxes on interstate movement.
 These warehouses were forced to operate below their capacity,
giving room to increased operating costs.
 However GST, these restrictions on inter-state movement of goods
have been reduced.
 As an outcome of GST, warehouse operators and e-commerce
players have shown interest in setting up their warehouses at
strategic locations.
 Reduction in unnecessary logistics costs leads to increase in profits
for businesses who are involved in the supply of goods.