Chapter 4. Need of GST in India

There are various taxes that have to pay at every stage and differently collected by State and Central Government and rates differ from one state to another. If we talk about GST, it will unified whole nation and taxes will be divided among Central and State Government, which will make easier to provide services and goods across country, as no more additional state taxes will be imposed.

Why in India, there is a need for GST?

Imposing several taxes on goods and services can lead to high cost and inefficient tax structure which can subject to shirking and revenue disclosures. The need for GST in Indian Taxation System will add value at each stage and will set off the rates both at state and at central level. Introducing GST, will increase the efficiency of taxation, improves the economic growth and it will bring whole nation to one national market.

What happen in present scenario? Our present taxation system is very complex and very confusing, corruption chance is there, which leads to distrust of government, there are hidden tax for exports, whereas no charge applicable on Importing of Goods/Services from one state to another.

Just to overcome these issues, Rajya Sabha introduced GST bill, which will bring transparency to taxation and consumer will get to know how much tax amount they are paying to government for sale/ purchase/ manufacturing.

Following are some of the points that can easily explain the need for GST:-

Tax Structure will be Simple: – At present, there are huge number of taxes that has to pay by consumers, with GST it will single tax to pay, which is much easier to understand. For businesses, accounting complexities will reduce and results less paperwork, which will save both time and money. GST will increase economic GDP by 2%-2.5%.


Tax revenue will increase: Simple tax structure will bring more tax payers and in return it will be revenue for government.

Competitive pricing: What GST will do? Well, it will eliminate all other taxes of indirect taxes and this will effectively mean that tax amount paid by end users (consumers) will reduce. As in Economics, lower will the prices, more will be demand for that product, results in more consumption of goods, which will be benefited to companies.

Boost to exports: If Indian market will be competitive in pricing, then more and more foreign players will try to enter the market, which results in more numbers of exporters and benefits to Indian Market. As far there is no tax rate is finalized, but yes GST is much needed in the countries where, it lacks transparency and complex taxation system.
There is a question in everyone’s mind……”Do we have to pay tax at different different rates and at different different levels? Is there no solution to this? Yes, the solution to this is implementation of GST. GST will take away cascading effect of various taxes that are charged on sale/ production/ purchase and so. Products reaches to customers at very high rate as compared to manufacturing, so with GST there will be only one tax and it will reduce burden to pay off.