Need of GST

Before GST India’s old indirect tax management process was quite complex. Central and State Governments used to charge a large number of taxes such as Service Tax, VAT, Purchase Tax, Local Body Taxes, Central Excise duty, Central Sales Tax, Entry Tax etc. all these were an independent tax with separate compliance requirements and provisions which creates complication and make it hard for the taxpayers to follow the legal requirements.

As the different tax systems were not interconnected this used to provide various ways to avoid tax. To streamline the tax process, the Goods and Services Tax (GST) is applied across India from 1st July 2017. GST will be imposed on the supply of goods or services or both (composite supply) and is beneficial for all stakeholders i.e. manufacturers, traders, service providers, citizens and the government of India.

The Simple formula of GST is to have the uniform tax rate across India i.e. for both the interstate and intrastate good and services transactions so that doing business is easy and it promotes compliance. The uniform GST rate reduces the tax process complication thus increasing intra-state and inter-State sales.

GST broadens the tax base, through common uniform processes and tax rates it improves compliance, promoted make in India and boost the economy, created the common national market by removing the interstate the economic barriers. GST eliminate the tax cascading which lower the cost of the goods and services for the consumer.

With GST, most of the compliance requirements such as registration, taxes payment, return filing etc. is performed online thus eliminating the physical interface between the taxpayers and tax administration authorities. The average tax burden on the majority of goods is reduced, which lead to a reduction in the prices of goods and services resulting in more expenditure. This boosted nationwide demand, creating more opportunities for local business and motivate job creation.