Goods and Service Tax

in India:
Here are the 10 Benefits
of the GST Bill

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In a historic development, the Rajya Sabha passed the constitutional
amendment paving the way for the Goods & Services Tax (GST).

The GST Council on Saturday fixed a 5 per cent tax rate on small hotels
and restaurants and approved draft of key supporting legislation's to
enable roll out of the new indirect tax regime from July 1 2017.

The reform is expected to bump up GDP by about a percentage point or

even more.

Here's a look at GST's Benefits:

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 1. Life Gets Simpler
GST will replace 17 indirect
tax levies and compliance
costs will fall.

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 2. Revenue Will Get a Boost
1. Evasion set to drop.

2. Input tax credit will encourage suppliers to

pay taxes.

3. States and Centre will have dual oversight.

4. The number of tax exempt goods will

decline.
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3. A Common Market
It's currently fragmented along state lines,
pushing costs up 20-30%.

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 4. Logistics, Inventory Costs will
Fall
Checks at state borders slow movement of
trucks. In India, they travel 280 km a day
compared with 800 km in the US.

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5. Investment Boost
For many capital goods, input tax credit is not
available. Full input tax credit under GST will
mean a 12-14% drop in the cost of capital
goods. Expected: A 6% rise in capital goods
investment, 2% overall.

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 6. Make in India
Manufacturing will get more competitive as
GST addresses cascading of tax, inter-state
tax, high logistics costs and fragmented
market. Increased protection from imports as
GST provides for appropriate countervailing
duty.

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7. Less Developed States Get a Lift
The current 2% inter-state levy means
production is kept within a state. Under the GST
national market, this can be dispersed, creating
opportunities for others.

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 8. Manufactured Goods Could Become
Cheaper

Lower logistics and tax costs.

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9. GDP Lift
HSBC estimates an 80 basis point rise in GDP
growth over 3-5 years. NCAER pegs this at 0.9-
1.7% thanks to the elimination of tax
cascading.

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 10. Freeing up Online
State restrictions and levies have complicated
ecommerce. Some sellers do not even ship to
particular states. All this will end with GST.

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Thanks For Reading!
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