Impact of GST on the Indian Economy: A Legal Analysis
Category: ARTICLE
「 ✦ Content ✦ 」
ABSTRACT
The Goods and Services Tax, implemented in 2017, represents one of the most significant tax reforms in Indian history. It is designed to create a unified tax structure across the nation. This article explores the economic and legal impacts of GST on India.
KEYWORDS
Goods and Services Tax, Indian economy, tax reform, indirect taxation, GST impact, tax compliance, cascading effect, legal provisions, landmark judgment.
INTRODUCTION
GST- the Goods and Services Tax was introduced in India on the 1st of July, 2017, as a single indirect tax to replace multiple overlapping taxes imposed by the Central and State governments. Before GST people would pay different taxes for different transactions, the implementation of GST played a vital role in transforming the indirect tax system by creating a transparent tax system, where goods and services are taxed at a unified rate. The main objective behind implementing GST was to implement the same tax system all over the Nation and to eliminate any kind of fall effect of taxes. Implementing GST has helped India to develop its GDP and many other things. However, the journey of GST has been a complex one.
IMPACT OF GST ON THE INDIAN ECONOMY
SIMPLIFICATION OF TAX SYSTEM
The main reason for implementing GST was to simplify the indirect tax system in India by replacing various taxes which were imposed by both Central and State Governments, with a one and only effective tax system. The introduction of GST facilitated the elimination of the cascading effect of indirect taxation and the concept of double taxation, thereby introducing a uniform regime governing indirect taxation in India. Before, businesses had to deal with multiple taxes, but after GST was implemented it brought all these taxes under a single roof, resulting in a reduction of burdens for businesses. This simplification has made businesses easy. The single tax system does not only help the taxpayers but also makes the job of tax collecting easier.
Elimination of the Cascading Effect of Taxation
Before the introduction of GST, the consumption tax system in India was characterized by the practice of levying taxes upon taxes known as cascading. For example, firms would frequently incur VAT costs on excise duties which added to the price of goods to the ultimate consumers. The cascading effect was removed by the introduction of input tax credits which were set off against output tax liability. This change brought down tax expenses for businesses since taxes incurred on inputs could be credited. As such it translates into lightered consumers of the goods and services since market prices have dropped and Indian goods have become more competitive globally. The also removal of cascading taxes has promoted the growth of the economy in a formalized structure hence enhancing the tax base.
LEGAL PROVISIONS
DUAL GST STRUCTURE
Daul GST structure or model is a simple tax with two different taxation components. Central Goods and Service Tax(CGST) and the State Goods and Services Tax(SGST) are the components that can be levied on a single transaction in India within a state on account of its federal nature.
2. INTEGRATED GOODS AND SERVICE TAX
Integrated Goods and Services Tax is collected at various stages by the traders and is paid to the central government first, after which, the central government distributes it to the state government’s share with them in accordance with the rates fixed by the related authorities. It saves people from double taxation.
3. INPUT TAX CREDIT
The ITC is considered as support system of the GST regime. It promises transparent credit on GST across the supply chain
LANDMARK JUDGEMENTS
1. M/S K. I. International(India) Ltd– High Court of Madras
This judgement while reaffirming that facility to pay any amount due under the Act is not available in respect of self -assessed tax in returns, also puts to rest any doubts as to whether GSTR 1 is a return under the GST Law or not.
2. J. K. Jain Buildtech India Pvt. Ltd. Vs Assistant Commissioner
The judgement lays down in unambiguous terms that an invoice in physical form should mandatorily accompany a consignment of goods being transported.
CONCLUSION
The implementation of GST has had its own advantages and disadvantages. It facilitates the economic growth of the country by being transparent and creates loss over a few sectors by the increased prices of the commodity.
WRITTEN BY: D.V. DEEKSHA.
REFERENCES
iPleaders blog- Impact of GST on Indian economy
