The Rajya Sabha passing the constitutional amendment that paves the way for GST, this transformation is all set to bump up the Gross Domestic Product by a significant percentage or may be more. We are hoping for many benefits of GST in India. Let us see what GST is all about – GST is one of the indirect taxes for every Indian citizen that will make our country India one unified common marketplace.
GST is the single tax which is levied on the supply of services and goods, right from the producer to the consumer. This proposed tax will replace all indirect taxes which are charges on all commodities and services by the state and central government. In fact, it will consolidate economies of all states. For more information on GST and Benefits of GST in India, please read our Complete guide to GST(Goods and Service Tax) in India. We also have a powerful and user-friendly business accounting software with GST reporting.
Top Benefits of GST(Goods and Service Tax) in India
GST is supposed to bring many benefits and advantages to consumers as well as the overall economy in India. Let us discuss some of the outstanding benefits of GST in India:
1. Life to get bit simpler:
GST is expected to replace seventeen indirect taxes, eventually leading to falling in compliance cost.
2. Boost in revenue:
The evasion is set to drop, which means that that input tax credit shall motivate the suppliers to pay the taxes. The central and state government will have duplicate oversight. This will eventually reduce the number of goods that are tax-exempt.
3. A unified common marketplace:
At present the market is fragmented along the state lines, pushing the cost by twenty to thirty percent.
4. The cost of inventory and logistics to fall:
The checks at the state border will slow the movement of trucks.
5. Boost investment:
For most of the capital goods, there is no availability of input tax credit. The complete input of tax credit under GST shall mean a drop of 12-14% of the actual cost of capital goods. Forecast – six percent rise in the capital good investment and two percent overall.
6. Economically weaker states get a boost:
The present two percent of inter-state levy means that the production is kept within the states. With GST national market coming into execution, this thing can be dispersed, thereby leading to some incredible opportunities for the economically weaker states.
7. Lower cost of manufacturing goods will lead to economic tax and logistic services:
With the manufacturing goods becoming cheaper, the tax and logistics for them would also get economical.
8. Lift of GDP:
As per a financial institution, 80 basis point rise is expected in the GDP growth in coming 3-5 years.
Proposed model of GST and its rate
The dual Good and Service Tax system is planned for implementing in a similar way as it was proposed by the empowering committee. Goods and Service Tax (GST) has two components:
- Central GST
- State GST
Both of them will be levied on the actual taxable value of the complete transaction. The GST rate as expected will be 14-16%. Once the combined GST rate is fixed, the government will then decide on the Central and State GST.
Looking at the positive expectations of Benefits of GST in India, there are companies that have started working on the software tools which will help in GST calculation and processing. One such GST accounting and reporting software is introduced by Advanta Innovations which is all set to be introduced in the market with its efficient and incredible results.