Impacts, Challenges and Pitfalls of GST After Implementation In India

Abstract

The Good and services tax (GST) is the biggest and substantial indirect tax reform since 1947. Goods and Services Tax (GST) is a comprehensive tax levy on manufacture, sale and consumption of goods and services at a national level. The GST regime holds an enormous opportunity for various sectors of the economy and is expected to herald a new era of indirect tax regime. By replacing various indirect taxes, GST is expected to be a key step in the field of indirect tax reform in India. The uniform tax reform under GST is expected to provide a uniform market for MSMEs. By cutting down multiple taxes, this reform will increase the flexibility in transfer of goods, hence reducing the total business cost. Also with GST enabling a centralized registration, starting a business would be much easier. With this act of standardizing the process under the new tax regime, many other activities like purchase of capital goods and products, reduction of tax burden on new businesses will help to boost this sector. While the lower Goods and Services Tax (GST) rates may lead to a decline in inflation, economic growth may not improve significantly in the short term even though it will benefit both India Inc and the government in the medium term. GST is unlikely to be a “positive” for economic growth in the short term, Crisil’s Joshi said the reform will improve the ease of doing business, bolster investor sentiment and lure more foreign investment in coming years. . It will also improve government's fiscal health as the tax collection system would become more transparent, making tax evasion difficult. An attempt is made in this paper to study the concept of goods and service tax and its impact on Indian economy. The study also aims to know the real benefits, present problems and challenges of GST after implementation and some issues which are yet to be considered in Indian scenario.