5 Ways Goods and Service Tax Benefit The Economy

The introduction of GST in India witnessed substantial deliberation and discussion over the years. However, considering its implementation, one can’t discount its benefits and how it has consolidated the prevalent indirect taxes into a unified tax structure.

Due to this, multiple small and big organizations have significantly avoided the declining tax effect. Moreover, it has carved the way for organizations to considerably save on their tax payments. Here are some ways GST benefited the Indian economy significantly.

5 ways GST has positively impacted the economy

The implementation of GST India notably benefited the Government, business sectors and the citizens of the country. Under this new tax reform, the price of goods and services was reduced, thereby boosting the Indian economy. Moreover, it also made Indian products and services internationally competitive.

Nonetheless, take a look at the other benefits of GST:

• Flexible and lesser tax compliances

Tax compliances are simplified through unification of tax rates, laws and procedures. Disputes in inter-states, such as e-commerce taxation and entry tax that prevailed before are no longer there, while varied taxation on same transactions is also removed. Resultantly, compliance cost is also reduced. Previous taxation systems had VAT and service taxes along with their compliances and returns. However, GST has combined them into one and reduced the number of returns significantly.

• Better competitiveness

While doing business, the reduction in transaction costs led to enhanced competitiveness for trade and industry. As per World Bank, the application of GST, along with disassembling inter-state check posts, is the most essential reform that improved competitiveness of India’s manufacturing sector. This is how GST has impacted the manufacturing sector, simplifying the supply chain taxes, thereby resulting in business efficiency.

• Benefits for manufacturers and exporters

The inclusion of significant Central and State Taxes in GST, comprehensive start out of input goods and elimination of CST (Central Sales Tax) would minimize the cost of locally manufactured products and services. Resultantly, it will improve competitiveness in the international sector and encourage Indian exports. Besides, uniformity in the tax rates and procedures across the country will significantly curtail the compliance cost.

• Eliminates cascading tax effect

A seamless procedure of tax credits throughout the whole value chain and across state boundaries ensures a minimal decline in tax, reducing unexposed cost of doing business.

• Alleviates tax burden on trade and industry

Due to the enactment of GST, the average tax rate on trade and industry is significantly on the lower side, thereby resulting price reduction and an increase in consumption. Resultantly, it will increase production and improve the development of several industries.

Moreover, domestic demands are likely to increase, and local businesses have considerable opportunities, generating more employment in the country. Therefore, with the positive impact of GST, trading sector is now growing and enhancing business efficiency.

Besides knowing how GST has boosted the Indian economy, one must also remember that relevant organisations must register their business under GST. In this regard, businesses crossing a certain turnover limit must be registered under GST. After applying for GST registration, individuals will receive ARN (Application Reference Number).

By using this, one can check the ARN status of their GST application until a GST certificate or GSTIN is provided by the Government. Moreover, by successfully meeting the GST requirements, individuals can apply for a sizeable business loan at affordable interest rates and meet necessary business requirements. Keeping necessary GST payment documents will allow borrowers avail credit without any hassle.

Also, availing finances from leading financial institutions like Bajaj Finserv will help borrowers benefit from pre-approved offers. These offers are available for existing borrowers on a range of financial products, such as personal loans, business loans, credit cards, etc. With these offers, borrowers can avoid the hassle of extensive documentation and save time. Therefore, enter your name and contact detail to check your pre-approved offer.

The primary reason for introducing GST was to ensure a seamless shift of input tax credits across the value chain system. It simplified and synchronized the indirect tax regime in India.