The concept of goods and service tax (GST) and its impact on indian economy

Abstract

Goods and Services Tax (GST) is a comprehensive tax levy on manufacture, sale andconsumption of goods and services at national level. Goods and Services Tax integrates Stateeconomies and boost overall growth. Currently, companies and businesses pay lot of indirecttaxes such as VAT, service tax, sales tax, entertainment tax, octroi and luxury tax. On GSTimplementation all these taxes cease to exist. There is only one tax, that too at the nationallevel, monitored by the central government. GST is levied at the final point of consumptionand not at the manufacturing stage. Previously, separate tax rates are applied to goods andservices. Under GST, there is only one tax rate for both goods and services. The goods andservices Tax is an improvement towards a comprehensive indirect tax reforms in the country.Integration of goods and services taxation would give India a world class tax system andimprove tax collections. It would end distortions of differential treatments of manufacturingand service sector. GST is expected to create a business friendly environment and henceinflation rates would come down overtime as a uniform tax rate is applied. It will alsoimprove government's fiscal health as the tax collection system would become moretransparent, making tax evasion difficult. This paper is a study of the concept of goods andservice tax and its impact on Indian economy. It also aims to know the advantages andchallenges of GST in Indian scenario