GST was introduced as a revolutionary tax reformation regime in July 2017. The new taxation system consolidated more than twenty different types of taxes and duties on goods and services Including Value Added Tax (VAT), Service Tax (ST), Excise Duty (Excise), Sales Tax, Octroi, Entry Tax, Special Additional Duty and various other types of direct and indirect taxes under an umbrella of Goods and Services Tax.
Now instead of multiple taxes, there is only one tax, i.e., Goods and Services Tax, GST. Initially, GST had been introduced in five different slabs i.e. 0%, 5%, 12%, 18% and 28%. All the products and services were categorised into these five slabs. Though, with every subsequent meeting of the GST council, taxation slabs for various items have been changed as per the requirement of the economy.
The frequent changes and updates ever since its inception, has made it a bit tricky for a common man to comprehend. So, let’s delve deeper into this concept and understand the impact of GST on the common man in India.
It is not a hidden fact that the ultimate burden of every new tax falls on the final consumer, i.e., the common man. In the context of GST, the receiving party is not only the individual consumer but also the small traders and manufacturers. Under GST, many small business owners, for the first time in their lives, came under the purview of a commercial tax.
To understand whether GST has been beneficial or detrimental for the citizens at large, let’s list out the impact of GST in 7 points:
By getting rid of multiple taxes, GST has made the taxation system in the country extremely efficient. Now, customers need not bear the burden of cascading effects of multiple taxes. The new unified tax system in the country has helped to get rid of the bundle of taxes which created utter confusion and chaos. It is now easy for a small businessman to manage his/ her taxes without the fear of committing a mistake.
Most of the essential items have been kept in the 12% and 18% taxation slabs under the GST. This is much lower in comparison to the previous tax regime when some such products were taxed as high as 28%. Moreover, as the burden of taxes has reduced substantially for the manufacturing sector, the cost of production has also reduced, and the prices of most consumer goods have come down. Now even small business owners can claim input of GST on their purchases and reduce their tax burden significantly, i.e., earlier, the tax that was a cost for them can now be claimed as input and offset the tax liability.
The introduction of GST has effectively announced the end of “Babu-dom” that the economy suffered from. By eliminating the officers and bureaucracy from the entire process, GST has made life easier for a common man. Now, you can complete all your GST-related transactions on the official GST portal; there is no need to visit the tax office and pay a bribe to the officer to get the file processed. Payment, refund, return filing everything is now conducted online.
Earlier certain rogue elements used to spoil the entire business scenario. By evading taxes, preparing “kuccha bills,” and initiating cash payments, certain businessmen were evading taxes and kept functioning under the radar of the tax authorities. But GST has eliminated that scope as it is mandatory for every small business to register for GST and follow the unified tax regime. The self-check mechanisms in the GST Act as a useful tool against the rogue elements in the chain. The anti-profiteering clause acts as a deterrent against unscrupulous businessmen.
After the introduction of GST, various excise and taxation check posts have been eliminated from the national highways. This has not only ensured seamless movements of goods but has also reduced the scope of corruption. With the implementation of E-waybill system, the movement of goods has become seamless across state borders, boosting productivity.
As GST has lowered taxes on manufacturing, there has been an increase in the demand for goods and services. In order to cater to this demand, the supply has been scaled by the manufacturers correspondingly. As a result, more employment opportunities have opened up in the private sector for the common man. Additionally, there has been an increasing demand for GST professionals across companies.
When corruption is reducing, employment opportunities are coming up, productivity is increasing, and the system is becoming more transparent, foreign investors are more willing to invest in the country. As a result, the economy of the country is steadily increasing, which translates into better infrastructure and better earning opportunities for every aspiring business.
Undoubtedly, GST can be touted as a game-changing move that holds a lot of promise for the future growth of the economy. If the same level of intensity is kept in the future as well, nothing can stop India from becoming a global leader.
To apply online for Best Credit Cards in India, Secured Loans and Unsecured Loans, visit mymoneymantra, the leading online lending marketplace that offers financial products from 90+ Banks and NBFCs. We have served 7 million+ happy customers since 1989.