GST and its Impact in Economic Development of India
The introduction of Goods and Services Tax on the 1st of July 2017 was a very significant step in the field of indirect tax reforms in India. By amalgamating a large number of Central and State taxes into a single tax, the aim was to mitigate cascading or double taxation in a major way and pave the way for a common national market. From the consumer point of view, the biggest advantage would be in terms of a reduction in the overall tax burden on goods, which was estimated to be around 25 to 30 percent.
The introduction of GST would also make Indian products competitive in the domestic and international markets. Studies show that this would have a positive impact on economic growth. Because of its transparent and self-policing character this tax would be easier to administer. GST would be applicable to the ‘supply’ of goods or services as against the present concept of a tax on the manufacture of goods. GST would be based on the principle of destination-based consumption taxation as against the present principle of origin-based taxation.
It would be a dual GST with Centre and the States simultaneously leaving it on a common base. GST to be levied by the center would be called Central GST or CGST and that to be levied by the States (including Union Territories with legislature) would be called State GST or SGST. Union Territories without legislature would levy Union territory GST or UTGST.
GST will help to create a unified common national market for India, giving a boost to foreign investment and ‘Make in India’ campaign. It will boost export and manufacturing activity. It will also generate more employment and thus increase GDP with gainful employment leading to substantive economic growth. Through GST the government would improve the overall investment climate in the country, and it will naturally benefit the economic development of the nation.