- No Tax on Tax – There will be no cascading effect on taxes. For eg VAT was charged on base price + excise duty. Now both CGST and SGST will be levied on base price.
- Reduction in prices – Due to full and seamless input credit, manufacturers or traders don’t have to include taxes as a part of their cost of production. This could lead to fall in prices.
- Ease of doing business – GST replaces many indirect taxes both at Centre and State level.
- Tax Revenues will rise – Tax evasion is set to drop due to the concept of Invoice level matching at the return filing stage. Also the number of exempt goods and services will decline. GDP may grow by 0.9% to 1.7% as per NCAER.
- Logistics and transportation costs will fall. No need to have multiple godowns in different states. Trucks will move faster as there will change in the approach and processes at the state borders.
- Input tax credit will be available on capital goods, which would mean drop in their cost by 12 to 15%. This will boost the investment cycle in India.
- Savings of 2% CST in Inter State business.
- E commerce business will be able to ship freely as restrictions and lack of clarity imposed by certain states will be a thing of the past.
- Make in India programme will get the necessary impetus due to the above reasons.
- India is truly on the path to become One Nation – One Tax – One Market.
The CBEC has mentioned the advantages of GST to the various segments of the society. You may view the same by clicking below :