GST: A Cure for Ills of Existing Indirect Tax Regime

Abstract

In the dawn of the twentieth century, the world was facing an economic crisis. India thus initiated to come up with new federal policies with respect to the indirect taxes imposed in the country. The concept of Goods and Service Tax, popularly known as GST, as the most awaited tax reforms, was introduced on 1st July 2017 keeping the notion of One Nation, One Market, One Tax. Taxes are a way to collect the money by the people, from the people, for the people. GST was thought to be a broad base tax levied at every stage of production and distribution. The GST has been proposed to have a ‘dual’ structure, which means it will have two components - the Central GST and the State GST. With the enactment of GST in India, it has been expected to make a remarkable presence among the global economies. GST will benefit both the sides of the system. On one side, it has been expected to reduce the tax compliance, cost of administration, generating more revenue for the government and, on the other hand, it will ensure transparency in the system, set-off input credit against the liability and also eliminate the possibility of cascading of taxation for the consumer. GST will eliminate various indirect taxes namely; Value Added Tax (VAT), Central Sales Tax (CST), Service Tax, Central excise duties and Additional Excise Duties, CVD and special CVD’s, central surcharges and cesses against the one system of GST. The reduced tax burden will foster the level of production by raising the GDP and also the purchasing power of the consumers. With the inception of GST, there are certain other factors which cannot be neglected. The minimum limit to comply the GST registration has been extended from Rs 5 lakhs to Rs 25 lakhs, the abolishment of entry charges applicable on inter-state trade and commerce, common eye for both the goods and the services. This paper tries to study the suitability of GST in the context of the Indian economy and its prospects for the state to generate revenue.

Keywords: Indirect Tax, Goods and Service Tax, Tax, Awareness and Knowledge, Indian Economy

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