Why GST Is Critical For A Diverse Country Like India?

“It was only for the good of his subjects he collected taxes from them, just as sun draws moisture from earth to give it back by a thousand fold.”– Kalidas

Taxation comes across like a modern day phenomenon to all of us as we go about paying taxes on our earnings as well as expenditures on day to day basis.

Historically taxation has been around for many centuries in our country and today’s complex taxation system which we all wrestle with, has been somewhat inspired from the ancient regimes.

In today’s context, multiple taxes were created and implemented by the successive state as well as central governments as Indian economy made rapid strides post liberalization.

This practice resulted same product being taxed multiple times at various steps like sourcing, transportation, point of sales etc which made the product(s) costlier and made the entire tax management process very complex for businessman all over the country.

Our central and state governments had implemented following taxes in the country in the past which GST has replaced:

A diverse country like ours is made of almost three dozen states and union territories which produce numerous goods and services, and thereby contribute immensely towards our 2.4 Trillion Dollar plus GDP (2016).

Transportation and sales of products has also been subjected to various local as well as central taxes, levies and cess. Goods and Services Tax (GST) aims to replace the intricate web of indirect taxes in the country and usher in a unified taxation system which will simplify the entire process for businessman, government, law enforcement agencies and for the common man all over the nation.

New tax regime has been a much needed and sought after reform for the country. Some of the major advantages of implementation of GST in our country would be:

• ‘One Nation, One Tax’ will bring in all the states and industries under single taxation regime.
• GST will remove all the taxation complexities related to intra-state transportation, warehousing and selling of products.
• Entire country will become a single marketplace which will result into level playing ground for businessman from all the territories.
• Entire taxation process will be online which will bring in more transparency to various processes like registration, tax payment, GST returns filing etc
• Single tax will make the sourcing and manufacturing more efficient and increase overall competiveness in the market.
• Central and state governments will benefit from higher tax compliance especially from unorganized sector which will eventually lead to greater spending from government towards nation building.
• Common man will get better value for their expenditure in a transparent manner.
• Industries like Hospitality, textiles, automobiles, FMCG etc will receive big boost with GST as prices will reduce and consumption will rise.

To conclude, it is imperative that our country embraces GST with open arms as it aims to bring in lot of uniformity in terms of taxation in a diverse country like India. Overall, GST is expected to boost the entire economy by 2% which will contribute immensely in long term towards nation building.