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How Goods and services tax plays a major role in Indian Economy?

gst registration in Tirupur

gst registration in Tirupur

In this blog, we have discussed about the goods and services tax impacts and roles played by them in the Indian economy.

Chiefly, Goods and service tax is a transformation designed to create an ecosystem where free and fair competition can flourish. The state and Centre in agreement decided to pool in their resource and sovereignty to create this economic consolidation for the common goal of economic prosperity. India’s first federal institution, the GST reforms does several multiple arbitrary tax schemes, making it easier to administer taxes while making revenue collection more efficient.

When state and Centre have independence to charge taxes based on their preferences, the entire system goes unfair and the movement of goods also becomes difficult. The Goods and Services Tax is another such undertaking that is expected to provide the needed stimulant for economic growth in India by transforming the existing base of indirect taxation towards the movement of goods and services.

GST is also expected to eliminate the effect of taxes. India planned to play an important role in the world economy. The hope of GST introduced is high not only within the country, but also within neighbouring countries and developed economies of the world.

Goods and services tax

The introduction of Goods and Services Tax in India is on high. The Constitution Amendment Bill is likely to replace existing multiple indirect taxes. Lok Sabha has already passed this Bill. The current indirect tax system is a major weakness in India’s economic growth and competitiveness. Tax barriers in the form of CST, entry tax and restricted input tax credit have uneven Indian market.

Removal of tax barriers on introduction of uniform GST across the country with seamless transaction, will make India a common market leading to economy of scale in production and efficiency in supply chain. It will expand trade and commerce.

Moreover, GST will have positive impact on organised logistic industry and modernised warehousing. GST provides the ease of doing business in India. Integration of existing multiple taxes into single GST will significantly reduce cost of tax compliance and transaction cost.

Benefits of GST to the Indian Economy

Consequently, these things are possible only if the actual benefit of GST are passed on to the final consumers. There are several other factors such as the seller’s profit margin, which determines the final price of goods. Moreover, GST alone will not determine the final price of goods.

How will GST impact the Indian Economy?

What will get costlier according to the GST rule?

The following will costlier as per the GST rule:

       As per the former Service tax regime, the taxes was 15%, GST on commission or fees paid to facilitating agents or banks will be taxed at 18% at present.

The rate of GST on other goods

The rate of GST is 18% for soaps and 28% on washing detergents.18% GST for movie tickets that cost less than Rs. 100 and 28% GST on tickets costing more than Rs.100 and 28% on commercial and private vehicle and 5% GST on ready-made clothes. The rate on under-construction property booking is 12%.

Some industries and products were excused from paying taxes. They are dairy products, fresh vegetables & fruits, meat products, products of milling industries, and other groceries and necessities. Check posts across the country were stopped to ensure free and fast movement of goods.

Goods kept outside the GST      
What is GST Return?

GST return is a document that is filed by the experts, who are registered under GST Act. A GST Return includes the details such as:

Scenario before the implementation of GST

 Before implementation of GST separate accounts are required to be maintained for excise, VAT, CST and service tax. Apart from accounts like sales, purchases, and stock, the following accounts are separately required to be maintained:

 Scenario after implementation of GST

 Under GST all the above taxes are subsumed into one tax. Thus following accounts are required to maintain in addition to purchases, sales, and stock:

 While the number of accounts to be maintained are more but through accounting and record keeping you will find it easier to maintain the books of accounts and comply with GST provisions.

Conclusion

Thus, the introduction of the Goods and Services Tax will be a very notable step in the field of indirect tax reforms in India. By unifying large number of Central and State taxes into a single tax, GST is expected to double taxation and make taxation overall easy for the industries. The most beneficial will be in terms of reduction in the overall tax burden on goods and services for the end customers.

Moreover, introduction of GST will also make Indian products competitive in the domestic and international markets. The GST will be easier to administer because of its transparent character. Once the proposed taxation system is implemented, this greatly promises in terms of sustaining growth for the Indian economy.

We Smartcorp are the one of the leading consultants for GST registration . Free- consultation in Tirupur, Affordable pricing, Get your GST number directly from Government, Fill Form online and Process GST Application, 100% Secured, ISO Certified services. For more details, Kindly visit us.

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