Three reasons why GST is a Good and Simple Tax
TOPICS : Current Affairs
We've all heard the debate. One side calls it the Gabbar Singh Tax. The other side calls it a Good and Simple Tax. The Goods and Services Tax, implemented on 1st July 2017, has many names. Amidst all this confusion, it becomes very difficult to ascertain the truth. Being a finance professional I have worked on the implementation of GST at various businesses. I have also worked on Excise Duty, Service Tax and Value Added Tax (VAT), which existed before implementation of GST. Though we faced a lot of difficulty initially, overall it appears that GST is indeed a Good and Simple Tax. Here are three reasons why - 1. It is a single tax throughout India -GST has replaced around 17 local taxes and levies and combined them into one single tax. As such, businesses have to pay tax only once. This enhances Ease of Doing Business significantly 2. There are uniform rates throughout India -Earlier there used to be different rates in different states. As a result, prices of several items were different across states. An SUV car purchased in Goa might not cost the same as one purchased in Mumbai. But after GST, there are uniform rates across India. The same rate of tax will be charged on your smartphone whether you buy it from Delhi or Noida (UP). This helps consumers as there is no scope of an item being cheaper in another state. It also helps businesses because they don't have to maintain separate price lists 3. It is difficult to evade - In GST there is a concept known as Input Tax Credit (ITC). Due to this, if a seller does not pay his share, it will have to be borne by the buyer. This way, a buyer can refuse to purchase from a seller who does not pay his share of tax. Evasion is possible only with the connivance of all members of the supply chain, so it is much more difficult. There are several other advantages of GST. But for now, I will be restricting them to three. I hope you liked this opinion piece. If liked it, please press like and share it with your friends and family. See you next time!