February 23, 2023

Benefits of Goods and Services Tax (GST) in India

GST is a unified tax applied to the supply of goods and services from manufacturers to consumers, making it a single indirect tax across India. This unification of taxes will enable India to function as a unified common market.

The advantages of GST

We have listed ten benefits of GST below.

Simplified compliance:

GST implementation in India would be supported by a comprehensive IT system, enabling taxpayers to access registration, payment, return and other services online, resulting in transparent and simplified compliance.

Standardised tax rates and structures:

GST will standardize the tax rates and structures, increasing ease of doing business, irrespective of the state where the business operates.

Elimination of cascading effect:

Seamless tax credits across the value chain and state boundaries will reduce cascading of taxes, eliminating hidden costs associated with doing business.

Enhanced competitiveness:

A reduction in transaction costs would improve trade and industry competitiveness. The implementation of GST, along with the elimination of inter-state check-posts, would enhance the competitiveness of India’s manufacturing sector, according to the World Bank.

Benefits for manufacturers and exporters:

The subsuming of major Central and State taxes in GST, comprehensive set-off of input goods and services, and phasing out of CST will lower the costs of goods and services produced in India, making them more competitive in the global market, while the uniformity of tax rates and procedures would reduce compliance costs.

Benefits of GST for the government:

Simplified administration:

GST replaces multiple indirect taxes, making it easier and simpler to administer, backed by a robust IT system.

Better control over tax leakages:

GST implementation will lead to improved tax compliance, with better controls on tax leakages, thanks to the seamless transfer of input tax credits throughout the value chain, incentivizing tax compliance by traders.

Enhanced revenue efficiency:

GST is expected to decrease the cost of tax collection, leading to higher revenue efficiency for the Government.

Benefits of GST for the consumers:

Transparent tax structure:

GST implementation ensures only one tax from the manufacturer to the consumer, resulting in transparency of taxes paid to the end consumer.

Relief from tax burden:

GST provides credits for input taxes paid at each stage of value addition, effectively making it a tax only on value addition. Due to efficiency gains and prevention of leakages, the overall tax burden on most commodities will come down, benefiting consumers who will bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.


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