IMPACT OF GST ON INDIAN ECONOMY
Abstract
— The Goods and Services Tax (GST) came into effect in India on July 1, 2017, introducing a comprehensive indirect tax system, to simplify and unify the country's complex tax structure. It supplanted various indirect levies such as excise duty, service tax, value-added tax (VAT), and others, aiming to create a single, transparent, and efficient taxation regime. GST is a tax based on the destination principle, indicating that it is imposed at the point of consumption rather than the point of origin. The GST framework in India adopts a dual structure, consisting of the Central GST (CGST) administered by the central government and the State GST (SGST) imposed by individual states and union territories. Furthermore, inter-state transactions are subject to an Integrated GST (IGST), promoting smooth and uninterrupted trade interactions between different states. The GST mechanism functions on a self-policing model, placing a strong emphasis on self-assessment and compliance. Businesses that are registered under GST are responsible for collecting the tax on their sales and can claim input tax credits for the GST they have paid on their purchases. This approach is designed to minimize tax cascading, ultimately enhancing the efficiency of the tax system. GST compliance involves various processes, including GST registration, invoice generation, filing of returns, and payment of taxes. Businesses with a yearly turnover above a specified threshold are called to register for GST. Regular GST returns need to be filed, summarizing sales, purchases, and tax liability. It is essential for businesses to adhere to compliance timelines to avoid penalties and maintain a good compliance rating. GST has a huge influence on the Indian economy. It has streamlined tax administration, reduced tax evasion, and enhanced revenue collections for both the central and state governments. Moreover, it has simplified logistics and supply chains, creating a common national market and fostering economic growth and investment. Despite challenges and concerns, GST continues to evolve, with efforts to improve the system and address the needs of businesses and consumers alike.