Impact of Demonetization and GST (Goods and Services Tax)

Abstract

Abstract In this case study the government itself is the protagonist and its steps of demonetization and introduction of GST are the main issues being debated for resolutions. GST and demonetization are two bold decisions taken by the Indian government to tackle the issues which are existing and to resolve the emerging issues which arises day by day in the Indian economy. GST and demonetization are likely to be described as game-changers of the Indian economy. GST will require companies to not just be tax compliant but also readjust their structure and supply chain networks. On the other hand demonetization is leading to boom the cashless payments. These two will render great opportunity for customers to relook at their structure and redesign their supply chains, since the current supply chain has been designed according to interstate taxation. This biggest tax reform in Independent India, the GST Act has brought on a platter, a concept called ‘Composition Levy’ to its taxpayer. One of the fundamental features of GST is the seamless flow of input credit across the chain (from the manufacture of goods till it is consumed) and across the country. The general public of the Indian economy expects both demonetization and the GST to adversely impact some sectors of the economy in the short run but have long-term benefits.