Anudeep DurishettyAIR 1 · CSE 2017 · 156 wordsTheir whole copy
Opening · a definition
Goods & Service Tax refers to single indirect tax that subsumes earlier VAT, excise duty and other such taxes. Impact on the unorganised Sector
Body · points and prose
to ease tax compliance burden by subsuming myriad taxes
- ② Promote Cooperative Federalism
- ③ To remove cascading of taxes
- ④ To create one national market thereby promote ease of doing business
- ⑤ Eliminate border checks
- ⑥ increase tax compliance & tax revenue
- ⑦ Reduce Corruption, blackmoney (via Invoice matching, GSTN technology)
Impact on the unorganised Sector
Negative ① GST may initically increase tax burden
(2) It prevents unorganised sector from easy cash based trade
Positive
(1) It fores them into the tax net (2) Will enable them to claim input credit (3) Lessens burden that is invisible now (4) Promotes culture of honesty
Benefits
Earlier
diagram
- Manufacturer → Wholesaler → Retailer → Consumer
- Below Manufacturer: Pays Excise duty, take credit
- Below Wholesaler: Credit of only VAT available
- Below Retailer and Consumer: Cascading of taxes
After GST
diagram
- M → W → R → C
- Arrows below M, W, R show: Credit of GST → GST credit
- Text below diagram: Get credit available in whole chain
- Thus → lower burden on Consumer
Thus from the above figure we see that GST will (1) Ease tax burden (2) Removes cascading of taxes
③ Self policing: Buyer ensures tax is paid so that input Credit is available
④ One nation, one tax → national economic integration
⑤ Technology based tax(GSTN) → less discretion to tax officers
⑥ Promotes Exports → more forex
⑦ Reduces tax evasion, formalises economy, benefits all
Close · a summary
Thus GST benefits consumers govt and also the businesses thus bringing huge benefits to economy
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