10 Benefits of the GST Bill in India

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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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