Abstract GST also known as the Goods and Services Tax is defined as the giant indirect tax structure designed to support and enhance the economic growth of a country. More than 150 countries have implemented GST so far. However, the idea of GST in India was mooted by Vajpayee government in 2000 and the constitutional amendment for the same was passed by the Loksabha on 6th May 2015 but is yet to be ratified by the Rajyasabha. However, there is a huge hue and cry against its implementation. It would be interesting to understand why this proposed GST regime may hamper the growth and development of the country. Keywords: Goods and service tax; Indian economy Introduction GST stands for Goods and Services Tax levied by the Government in a move to replace all of the indirect taxes. In India, the idea of GST was contemplated in 2004 by the Task Force on implementation of the Fiscal Responsibility and Budget Management Act, 2003, named Kelkar Committee. The Kelkar Committee was convinced that a dual GST system shall be able to tax almost all the goods and services and the Indian economy shall be able to have a wider market of tax base, improve revenue collection through levying and collection of indirect tax and a more pragmatic approach of efficient resource allocation. Under the Goods and Service Tax mechanism, every person is liable to pay tax on output and shall be entitled to enjoy credit on input tax paid and tax shall be only on the amount of value added. The principal aim of GST is to eliminate cascading effect i. e. tax on tax and it will lead to bringing about cost competitiveness of the products and services both at the national and international market. The GST System is built on integration of different taxes and is likely to give full credit for input taxes. GST is a comprehensive model of levying and collection of indirect tax in India and it has replaced taxes levied both by the Central and State Governments. GST be levied and collected at each stage of sale or purchase of goods or services based on input tax credit method. Under this system, GST-registered commercial houses shall be entitled to claim credit for the tax they paid on purchase of goods and services as a part of their day to day businesses. The historic GST or goods and services tax has become a reality. The new tax system was launched at a function in the Central Hall of Parliament on 1 st July, 2017 (Friday midnight). GST, which embodies the principle of "one nation, one tax, one market" is aimed at unifying the country's 2 trillion economy and 1. 3 billion people into a common market. Under GST, goods and services fall under five tax categories: 0 per cent, 5 per cent, 12 per cent, 18 per cent and 28 per cent. For corporations, the elimination of multiple taxes will improve the ease of doing business. And for consumers, the biggest advantage would be in terms of a reduction in the overall tax burden on goods. "Inflation will come down, tax avoidance will be difficult, India's GDP will be benefitted and extra resources will be used for welfare of poor and weaker sections, " Finance Minister Arun Jaitley said at the GST launch event in Parliament. The Lok Sabha has finally Passed the Goods and Services Tax Bill and it is expected to have a significant impact on every industry and every consumer. Apart from filling the loopholes of the current system, it is also aimed at boosting the Indian economy. This will be done by simplifying and unifying the indirect taxes for all states throughout India. 2. Objectives of the Study 1). To study the concept of Goods and Services Tax (GST) and its impact on Indian Economy, 2). To understand how GST will work in India. 3). To know the benefits of GST in India context. 3. Research Methodology The study focuses on the wide study of secondary data collected from various books, National & international Journals, published government reports, publications from various websites which focused on various aspects and importance of Goods and Service tax. 4. Benefits of GST to the Indian Economy Removal of bundled indirect taxes such as VAT, CST, Service tax, CAD, SAD, and Excise. Less tax compliance and a simplified tax policy compared to current tax structure. Removal of cascading effect of taxes i. e. removes tax on tax. Reduction of manufacturing costs due to lower burden of taxes on the manufacturing sector. Hence prices of consumer goods will be likely to come down. Lower the burden on the common man i. e. public will have to shed less money to buy the same products that were costly earlier. Increased demand and consumption of goods. Increased demand will lead to increase supply. Hence, this will ultimately lead to rise in the production of goods. Control of black money circulation as the system normally followed by traders and shopkeepers will be put to a mandatory check. Boost to the Indian economy in the long run. 5. How will GST impact the Indian Economy? Reduces tax burden on producers and fosters growth through more production. The current taxation structure, pumped with myriad tax clauses, prevents manufacturers from producing to their optimum capacity and retards growth. GST will take care of this problem by providing tax credit to the manufacturers. Different tax barriers, such as check posts and toll plazas, lead to wastage of unpreserved items being transported. This penalty transforms into major costs due to higher needs of buffer stock and warehousing costs. A single taxation system will eliminate this roadblock. There will be more transparency in the system as the customers will know exactly how much taxes they are being charged and on what base. GST will add to the government revenues by extending the tax base. GST will provide credit for the taxes paid by producers in the goods or services chain. This is expected to encourage producers to buy raw material from different registered dealers and is hoped to bring in more vendors and suppliers under the purview of taxation. GST will remove the custom duties applicable on exports. The nation’s competitiveness in foreign markets will increase on account of lower costs of transaction. Conclusion The proposed GST regime is a half-hearted attempt to rationalize indirect tax structure. More than 150 countries have implemented GST. The government of India should study the GST regime set up by various countries and also their fallouts before implementing it. At the same time, the government should make an attempt to insulate the vast poor population of India against the likely inflation due to implementation of GST. No doubt, GST will simplify the existing indirect tax system and will help to remove inefficiencies created by the existing current heterogeneous taxation system only if there is a clear consensus over issues of threshold limit, revenue rate, and inclusion of petroleum products, electricity, liquor and real estate. Until the consensus is reached, the government should resist from implementing such a regime. References The Economic Times (2009) Featured Articles from the Economic Times. GST India (2015) Economy and Policy. Mehra P (2015) Modi govt. ’s model for GST may not result in significant growth push. The Hindu. V. S. Datey, GST Ready Reckoner, Taxmann, 4th Edition 2017 Nitya Tax Associates, Basics of GST, Taxmann, 1 st Edition August 2016 http: //economictimes. indiatimes. com/news/economy/policy http: //indianexpress. com/article/explained/gst-bill-parliament http: //www. ey. com/in/en/services/ey-goods-and-services-tax-gst
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