Model Question and Answers for APSC | Write in short about GST and its impact on the economy. (APSC 2017)
Ans : GST is known as the Goods and Services Tax. It is an indirect tax which has replaced many indirect taxes in India such as the excise duty, VAT, services tax, etc. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017 and came into effect on 1st July 2017.
In other words,Goods and Service Tax (GST) is levied on the supply of goods and services. Goods and Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. GST is a single domestic indirect tax law for the entire country.
Effect of GST on the Indian economy
1. Simplification of the tax structure
2. Increase in tax revenue: The introduction of GST has helped merge the taxes of the state and central governments. This has helped remove the cascading effect of multiple taxes. Therefore, the burden of taxes has reduced for companies and customers. Not just this, taxpayers have increased in number and hence, the tax revenues have also increased significantly. The overall taxation system is now easier to administer.
3. Fostering production: Due to the impact of GST, the taxes have gone down. So, the end consumer has to pay less taxes. The reduced burden of taxes has enhanced the production and growth of retail and other industries.
4. SME support: Small and medium enterprises can now register under the Composition Scheme introduced by GST.
5. Enhanced pan India operations: Companies can now avoid taxation roadblocks, such as toll plazas and check posts. They can now transport their goods easily across India. This has resulted in the improvement of their pan India operations.
6. Increase in exports: GST has reduced the customs duty on exporting goods. The cost of production in the local markets has also decreased due to GST. All these factors have increased the rate of exports in the country.