GST - Will It Boost Indian Economy?

11 Pages Posted: 5 Jan 2018

See all articles by Satish kumar

Satish kumar

IIMT University, school of commerce and management; SCHOOL OF COMMERCE AND MANAGEMENT; SCHOOL OF COMMERCE AND MANAGEMENT

Shikha Kansal

Dewan Institute of Management Studies

Date Written: January 1, 2018

Abstract

India is notorious for its complex tax system. For new businesses and startups, it becomes impossible to navigate through various direct and indirect taxes. Constant changes to taxes like Service Tax are making things even worst. But now, the things are set to change with new Goods and service tax – commonly known as GST.

Goods and Services Tax (GST) is an indirect tax which was introduced in India on 1 July 2017 and was applicable throughout India which replaced multiple cascading taxes levied by the central and state governments. It was introduced as The Constitution (One Hundred and First Amendment) Act 2017, following the passage of Constitution 122nd Amendment Bill. The GST is governed by a GST Council and its Chairman is the Finance Minister of India. Under GST, goods and services are taxed at the following rates, 0%, 5%, 12%, 18% and 28%. There is a special rate of 0.25% on rough precious and semi-precious stones and 3% on gold. In addition a cess of 15% or other rates on top of 28% GST applies on few items like aerated drinks, luxury cars and tobacco products. GST was initially proposed to replace a slew of indirect taxes with a unified tax and was therefore set to dramatically reshape the country's 2 trillion dollar economy.

The Goods and Services Tax promises to alleviate this problem among many others. It is being hailed as the game changer for India’s economy and is being labelled as the biggest change in the Constitution since India’s independence. The Goods and Services tax or commonly referred to as the GST will replace the indirect taxes levied by the Central and State Governments and provide for a single and streamlined process. It presents India as a unified market to business owners and also aims at bringing a lot of black money back into the mainstream economy. The tax will be implemented at every step of value creation.

The rate of GST in India is between double to four times that levied in other countries like Singapore.

Keywords: goods and services tax, startups, constitution, indirect taxes, black money

JEL Classification: A11, B22, B27, H23

Suggested Citation

Kumar, Satish and Kansal, Shikha, GST - Will It Boost Indian Economy? (January 1, 2018). Available at SSRN: https://ssrn.com/abstract=3095107 or http://dx.doi.org/10.2139/ssrn.3095107

Satish Kumar (Contact Author)

IIMT University, school of commerce and management ( email )

O POCKET
GANGA NAGAR
MEERUT, UT
India

SCHOOL OF COMMERCE AND MANAGEMENT ( email )

O POCKET, GANGA NAGAR
MEERUT
Meerut, Uttar Pradesh 250103
India
9917100905 (Phone)

SCHOOL OF COMMERCE AND MANAGEMENT ( email )

O POCKET
GANGA NAGAR
MEERUT, UT
India

Shikha Kansal

Dewan Institute of Management Studies ( email )

Delhi - Mussorie By Pass Road
NH-58
Partapur, Meerut, Uttar Pradesh 250103
India

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