Recently India has revised its old taxation system as GST (Goods and Service Tax). Many economists believe that GST will assist the country in achieving a healthy tax functioning. GST will also help common people and businesses with its transparent working. Various reasons are there that supports the implementation of GST in developing countries, some of the prominent ones are discussed as follows.
Eliminates Cascading Tax System
Before GST, the tax system in India has a cascade taxation. This resulted in taxes over taxes. Cascade tax results in hiked prices of goods, but with GST there is only a single tax levied on the goods resulting in lesser costs. With the implementation of GST, people will be able to get goods at reduced prices. Even GST will help in better money flow through its single system and help industries to have a prosperous growth.
Easy Starting and Expanding of Businesses
People who are interested in starting their own businesses or want to expand across various states of the country will be benefited by the implementation of GST. Due to the centralized registration and simple process involved in the GST, new businesses are much easier to set-up. A special task team was required in business to handle the different and complex forms of taxes, but with GST the new businesses do not have to worry much about resources required for handling different taxes.
Convenience in Transport and Reduced Logistics Costs
Implementation of GST results in the exemption of small border taxes, which will assist in faster and hassle-free interstate movements. Logistics cost may also get slashed for companies that are manufacturing non-bulk goods.
Increase in Revenue of Country
With GST, it is very difficult to buy and sell goods without paying taxes as both the state and center government will have an eye on suppliers. This will be an inconvenient thing for suppliers who are avoiding paying taxes, but it certainly helps the government to have a boost in the revenue. The increased revenue will result in greater government budget and thus more development can be anticipated.
Increase in GDP (Gross Domestic Product)
It is estimated that GST in India will help in a rise of 80 basis points in the GDP of the country within a span of 3 to 5 years. The elimination of almost 17 different indirect taxes will not only ease the paying of taxes but also assist in the growth of GDP of the nation.