Impact of GST on Indian Economy

Abstract

GST Stands for Goods and Services Tax (GST). The GST Act was passed in the Lok Sabha on 29th March, 2017 and came into effect from 1st July, 2017. It was termed as One Nation One Tax. The major impact of introducing GST in India is the transformation in the fiscal structure of the Indian federal setup. The fiscal right of the states and centre to deal with goods and services independently will be taken away and both the Governments have to depend on each other’s for managing the so called goods and services tax in future. This is a very hard blow to the freedom of participating governments in the federal system. The perceived benefits are – • GST would eliminate to a large extent, the multiplicity of administrative mechanisms and tax rates across different states. • It removes many of the cascading effects of indirect taxation. • Its positive impact on retail as a whole will make supply chain more cost effective. • It is expected to address most of the complex issues in taxation like software, intangibles, composite contracts etc. and brings more clarity in the levy.