Since its implementation, the goods and service tax has turned India’s business scene around. Know more about it here.
Various indirect taxes such as VAT, Excise Duty, and Service Tax were replaced by GST (goods and service tax) in India in 2017. A common market will be created by eliminating state barriers under GST, which simplifies the indirect tax system, eliminates tax cascading, and eliminates the cascading effect of taxes. Various stakeholders are affected positively and negatively by the goods and service tax Impact Analysis in India.
As a result of GST’s implementation, India’s economy has grown, revenue collection increased, and the tax system has become more transparent and efficient.
Small and medium-sized businesses, in particular, have been negatively affected by it, including higher prices for goods and services and relying on the GST calculator for more accurate calculations of the same. According to the GST Impact Analysis, various stakeholders are affected positively and negatively by GST in India. As a result, businesses have raised compliance costs, and consumers have increased the prices of some goods and services. The government, however, can collect more revenue and reduce tax evasion. In India, the GST Impact Analysis assesses the impact of GST India on businesses, consumers, and the government. The following are some of the key impacts:
Businesses:
Businesses require registration under GST, filing returns, and paying taxes. As a result, compliance costs have increased for businesses, particularly small and medium-sized ones. Furthermore, GST has eliminated the cascading effect of taxes and created a level playing field for businesses, leading to lower consumer prices.
Consumers:
Because indirect taxes are included in the cost of some goods and services, goods and service tax has increased their price. Because cascading taxes have been eliminated and interstate barriers have been removed, some goods and services have been cheaper.
Government:
Due to GST’s comprehensive coverage of indirect taxes and the elimination of tax evasion, the government has collected more revenue. Businesses have also found it easier to do business because compliance costs have been reduced, and a common market has been created.
Economic growth:
Creating a common market and reducing cascading effects of taxes, goods, and service tax have been key to boosting India’s economic growth. In addition, it has diminished businesses’ compliance costs, enabling them to expand and operate more efficiently.
Revenue collection:
Due to the GST’s comprehensive coverage of indirect taxes and reduction of tax evasion, the government has been able to collect more revenue. In addition, the tax system has become more efficient and transparent.
Prices of goods and services:
Some goods and services have become cheaper due to GST, while others have become more expensive. As a result of reducing the cascading effect of taxes and removing interstate barriers, consumer prices have fallen. Indirect taxes, however, have caused prices to rise due to their inclusion in the cost of goods and services.
Small and medium-sized enterprises:
As a result of GST India implementation, small and medium-sized enterprises have experienced mixed results. Despite reducing cascading tax effects and creating a level playing field, it has also increased compliance costs for businesses, leading to higher expenses.
Compliance:
In addition to registering under GST, filing returns, and paying taxes, GST India has increased business compliance costs. Small and medium-sized businesses, as well as financial institutions that support them, such as Bajaj Finserv, have been affected by these increased costs.