It’s been nearly one year since the new indirect tax regime came into existence on the 30th of June 2017, as ‘GST: One nation, One tax,’ in order to simplify the taxation on goods and services. Administered by both the centre and states, GST (Goods and Services Tax) has subsumed several state and central indirect taxes such as State VAT, Central Excise Duty, Purchase Tax and Entry Tax. Positioned as one of the major structural reforms of the Narendra Modi-led government in the last four years since they came to power, the revenue department has released key benefits under the new regime. We take a closer look at the five key benefits.
Ease of doing business: According to the Revenue Department, GST has provided benefits to the small-taxpayers. Notably, under the GST, tax payers with an aggregate turnover in a financial year up to Rs.10 lakhs are exempt from tax. (Aggregate turnover shall include the aggregate value of all taxable and non-taxable supplies, exempt supplies and exports of goods and/or services and exclude taxes viz. GST.). Further, the GST has helped to improve the ease of doing business due to common national market.
Decrease in inflation: According to the government, GST has led to a decrease in inflation due to the reduction in cascading effect of taxes and overall reduction in prices. With an intent to curtail the inflation, the Government has taken various measures under the new regime including finalization of rates which are aligned to existing rate structure for most items and introducing an anti-profiteering clause in the GST law.
Decrease in black transactions: Due to the ‘non-intrusive’ and transparent tax system, the GST has led to a reduction in black transactions, according to the Ministry of Finance. Notably, GST is a self-regulating on-line tax system.
Boost to Make in India: The government’s initiative of Make In India has also received a big boost under GST, as IGST provides protection to the domestic industry. Further, certain taxable supplies are taxed at the rate of 0% rather than at the standard rate of 15%, in case of export related businesses.
More informed customers: The ministry of finance states that GST has led to more informed consumers due to the simplified tax regime, and the reduction in multiplicity of taxes.