Name – Satendra Kumar Maurya

College – Dr. Ram Manohar Lohiya National Law University,

Lucknow
Topic – Influence of GST On the Indian Economy
ABSTRACT: -
GST stands for Goods and Service Tax. It was initiated in 1986 by Vishwanath
Pratap Singh 7th Prime Minister of India. After that in 2007, the current
government proposed to implement goods and services tax (GST) and presented
the same in Lok Sabha in 2011. In Dec 2014 GST again presented in Lok Sabha
by the BJP government and in same is passed in 2015. After approval of Rajya
Sabha same is called as one hundred one amendment of the Constitution and is
rolling out from 1st July 2017. After the passage of 25 years of economic
reforms in the indirect taxes is going for a revolutionary change in the form of
goods and service tax (GST). GST is introduced to make tax simpler and to
reduce the tax liabilities of small-scale industries and small businessman. It’s
very much simpler to understand and pay tax for both customer and seller
respectively.

INTRODUCTION: -
Goods and service tax (GST) is an indirect tax applicable throughout India
designed to support and enhance the economic growth of the country which
replaces multiple cascading taxes levied by central and state government of
India. More than 150 countries have implemented goods and services tax (GST)
so for. It was introduced as the constitution (one hundred and first amendment)
on 1st July 2017. It is levied when consumer buy a goods or services. Before
GST we had to pay many taxes like excise, service, custom and VAT etc. It
means to remove all the other smaller indirect taxes on consumption and levied
a single, comprehensive tax. A single common goods and services tax was
proposed and given a go ahead in 1999 during a meeting between prime
minister and some economic adviser. Atal Bihari Vajpayee set up a committee
to design GST which was headed by finance minister of west Bengal.
There are three major component of GST – first one is CGST which mean
central goods and services tax, second one is SGST which mean state goods and
services tax and third on is IGST which mean integrated goods and services tax.
If supply of goods and services within the state then it will charge central goods
and services tax (CGST) and state goods and services tax (SGST) and if supply
of goods and services outside home state then it will charge integrated goods
and services tax (IGST). India adopted dual goods and services tax, mean
taxation is governed by both state government and the central government. For
the collection of tax goods and services are divided into five different tax slab-
0%, 5%, 12%, 18% and 28%. For example - GST on soaps is 18%, GST on
detergent is 25% and GST for movie ticket is vary from 18% to 28%. However,
petroleum products, alcoholic drink and electricity are taxed separately by
individual state as per previous tax system they are not come under goods and
services tax. Goods and service tax (GST) is one tax in India is not the correct
statement as GST comes on the replacement of different indirect taxes,
However Custom Duty or Import - Export Duty will remain continued to levy.

WHY GOODS AND SERVICE TAX (GST): -

In India, there are so many different kinds of taxes that are levied in the form of
indirect taxes. The structure of taxes in India before GST was a rat trap.
Different state government charge different rate of taxes on different kind of
goods and services traded within their respective territorial limit under the
extreme power provided to the state under state list of constitution. Goods and
services tax (GST) expected to boost the Indian economy, broaden the tax base
and improve compliance through common and uniform procedure. It has
simplified the taxation system of the country. Through this both customer and
manufacturer can get a clear idea of the amount of tax they are charge. Goods
and services tax (GST) will also remove interstate barriers and create a common
national market. this will also lead to a reduction in the cost of business. It
reduced the multiplicity of tax and compliance cost and levied a uniform tax
rate across all state and union territory. It is also very easy to understand by
common man in compare with previous tax. Goods and services tax will reduce
the incentive for evasion by eliminating rate barrier between intra state and
interstate sales. Goods and services tax will also give a major boost to the
government of India make in India initiative by making goods or services
produce in India competitive in the national and international market. The only
biggest benefit of goods and services tax would be transforming India into one
nation one tax and one market.
INFLUENCE OF GST ON INDIAN ECONOMY: -
As we all know that goods and services tax (GST) subsumed all seventeen
smaller consumer taxes and levied a single uniform tax all over India . GST
effects Indian economy in many ways. Due to impact of goods and services tax
the taxes have gone down. So that consumers have to pay lesser tax and all
other smaller got a major discount in taxes because they are not mandatory to
register under GST. Through this scheme they have to pay taxes according to
their turnover. Small and medium enterprises can also register under the
composition scheme introduced by goods and services tax (GST). Therefore,
those businesses which having an annual turnover of 1.4crore only have to pay
1% goods and services tax (GST) and other enterprises having a turnover of 50
lakh are required to pay 6 % goods and services tax. The most important gain is
from the abolition of interstate check post erected to enforce taxes on cross
border transactions. This reduces the impediment to the interstate movement of
goods and help to create a national common market. It estimated that long
distance travel time for goods transportation has reduces by almost 20%. The
reform has also improved supply chain management. It is no longer necessary to
create branch offices merely to avoid interstate sale taxes. The abolition of
interstate sales tax has made the tax destination based and reduced inequitable
interstate tax exportation. The change of goods and services tax (GST) as
predominant indirect tax was expected to increase gross domestic product
(GDP) and revenue inflation. International experience shows that GDP growth
fall due to introduction of goods and services tax but it recovers after two three
quarter conversely inflation rises in initial quarter before it declines.
A major change gain is the reduced cascading due to more comprehensive
mechanism to credit input taxes against taxes on output. Not only the tax but the
cost of goods and services may also be affected in some sectors and there will
be a boost in revenue. Earlier the central excise duty was levied at the
manufacturing stage and it cascaded into the final retail value. Beside there was
no systematic mechanism for providing input tax credit between excise duty and
services taxes. The creation GST council is an important innovation in
cooperative federalism. This has helped to minimising the transaction cost of
reforming the calibration of domestic consumption taxes of the centre and state.
All this has resulted in erosion of the base and continued distortion the decision
to exempt almost 50% of the consumer price index basket has narrowed the
base. In addition, special rates on precious metal (0.25%), gold (3%) and
automobile etc. multiplicity of tax rate enhance administration compliance cast.
Goods and services tax have declined the custom duty on exporting goods and
the cost of production in the local market has also decline due to it. All these
factors have increased the rate of exports in the country. Goods and services tax
will effectively mean that the tax paid by the final consumer will decrease in
many cases and will help in boosting consumption, when help in boosting
consumption which is also beneficial. GST would also enhance the position of
India into both domestic as well as international market.

CONCLUSION: -
Implementation of goods and services tax is one of the best decisions taken by
BJP government. So that 1st July celebrated as Financial independent day in
India when all the member of parliament attended the function in parliament.
Goods and services tax accepted by 159 countries. Through the structure, GST
might not be a best one but once in place, such a tax structure will make India a
better economy favourable for foreign investment. It is very much accepted and
appreciated regime because it does away with multiple tax rates by centre and
state. And if you are doing any business then you can register under goods and
services tax (GST). Goods and service tax (GST) compensates the loss of
existing VAT or Sales Tax revenue to state government and the central
government. As it not only going to help Indian government but it will also help
you to trac your weekly business as in GST you have to make your business
actively statement each week.