Reformative measures like introduction of GST will improve economy

The introduction of the Goods and Services Tax (GST) in India has been one of the most significant reforms in recent times. The GST is a comprehensive tax that has replaced a plethora of indirect taxes that existed before its introduction. The GST has had a profound impact on the Indian economy, and its introduction has been a crucial reformative measure aimed at improving the economy.

How GST has improved the economy

The GST has significantly improved the Indian economy in several ways. Some of the key benefits of the GST are:

Increased tax compliance

Before the introduction of the GST, there were multiple taxes that businesses had to comply with. This often led to confusion and non-compliance. The GST has unified these taxes into a single tax, making it easier for businesses to comply with the tax laws. This has resulted in higher tax compliance, which has increased government revenue.

Elimination of cascading taxation

Before the GST, there was a cascading effect of taxes, which meant that taxes were levied on taxes. This led to higher prices for goods and services, which made them more expensive for consumers. The GST has eliminated this cascading effect of taxes, resulting in lower prices for goods and services.

Improved logistics and supply chain efficiency

The GST has significantly improved the logistics and supply chain efficiency in India. Before the GST, there were multiple checkpoints that goods had to pass through, which led to delays and increased costs. With the introduction of the GST, these checkpoints have been eliminated, resulting in faster movement of goods and lower logistics costs.

Boost to exports

The GST has made exports more competitive by making them zero-rated, i.e., no tax is levied on exports. This has made Indian goods and services more competitive in the global market, resulting in a boost to exports.

Challenges faced by businesses

While the GST has had several benefits, there have been some challenges faced by businesses as well. Some of the key challenges faced by businesses are:

Complexity of the tax system

The GST is a complex tax system, and businesses have had to invest time and resources to understand and comply with the tax laws. This has increased the compliance costs for businesses.

Technical glitches in the GSTN

The GST Network (GSTN) is the IT backbone of the GST, and businesses have faced technical glitches in the GSTN. This has led to delays in filing returns and refunds, which has added to the compliance burden of businesses.

Initial disruption to businesses

When the GST was first introduced, there was initial disruption to businesses as they had to change their accounting systems and processes to comply with the new tax laws. This led to some businesses facing cash flow issues and supply chain disruptions.

The way forward

The introduction of the GST has been a significant reformative measure aimed at improving the Indian economy. While there have been some challenges faced by businesses, the benefits of the GST far outweigh the challenges. The government has taken several steps to address the challenges faced by businesses, and it is expected that the GST will continue to improve the Indian economy in the years to come.