Tax on services will increase by app. 20% from the current tax rate after implementation of GST and therefore it becomes necessary for the government to ensure that benefit of reduced tax on goods is passed to consumers. Analysis of GST impact for various countries shows that implementation of GST will increase the inflation in medium term and therefore government should setup a mechanism to check the profiteering otherwise this new legislation will come as a double whammy for the common man.
Benefits which are expected from GST
- Central and state taxes will be subsumed after introduction of GST and will bring uniformity in indirect taxation across the country.
- Seamless credit of taxes paid in the entire supply chain will be available to producer of goods or provider of services in which will eliminate the cascading effect of taxes on inputs and therefore price of products is expected to reduce.
- Compliance burden will be reduced in the long run as there will be one platform for filing of returns, payment of taxes and assessments.
- Tax evasion will be easy to trace as all the records will be uploaded on single platform and thus cross verification of purchase claimed by one dealer Vs sale declared by other dealer will be easy to corroborate. This will increase transparency and will check the black money circuit.
- Reduced cost will increase the competitiveness of our products in export market.
