GST is the single biggest tax reform undertaken by India in its 70 years of independence. In one stroke, it has converted India from a collection of different markets (i.e. states) with internal tariff barriers to a unified market governed by one single tax, i.e. GST. Its implementation is all set to break the existing barriers between states and make the movement of goods between different states easier.
Earlier, the central government used to tax the production of goods and supply of services, while states taxed sale of goods but not the supply of services. Post GST, both the central and the state governments get to share the taxes of the full value chain of goods and services.
But to be fair, it is also true that such a massive switch to a new tax regime is not easy. It will take time to smoothen out the glitches and full adoption. In fact, the introduction of GST is just a start. Once the ball gets rolling, there is a lot more to be done. Further streamlining is absolutely necessary to make the system more robust and efficient.
Government too is using GST as a big tool to achieve various goals simultaneously. Promotion of the manufacturing section, giving boost to the exports by making production more competitive, job creation, bringing more people and businesses under the tax purview, steady formalization of the economy, lowering of compliance cost for the business, etc. as slowly these agendas are taken care off, the country will become more attractive for foreign investments too. GST is all set to change the economic landscape of the country. And as it eventually becomes evident, it will have a dramatic impact on most of the sectors of the economy. It won’t be wrong to say that this is the gamechanger move for the economy and is all set to add 1-2% to country’s GDP in long term.
