GST Impact Assessments
India has got a well-structured and simplified taxation system, where authoritative segregation has been done among the Central government, state governments and local bodies. But with the implementation of GST, the harmonization of tax rules, regulations, rates, processes and procedures across the states was expected to improve the ease of doing business in India. The removal of cascading of taxes and transaction costs associated with inter-state transactions was also expected to encourage investment and therefore, the economic growth of country. With the objective of the impact assessment of Goods and Services Tax on shopkeepers the present study was carried out.
The study was conducted in Hisar city of Haryana state where the findings highlighted that shopkeepers had highly increased tax burden and legal compliances, followed by increase in workers hiring capacity and no impact on ease of doing business, no loss and transparency in business. Further, results also showed that there was decrease in profit as they have to pay taxes more than 6 times in a year. With the implementation of GST, shopkeepers were having constraint in filing GST as now is getting a complicated process and due to changing GST rates they were facing high competition amongst the market.
The implementation of the Goods and Services Tax (GST) in India has had a significant impact on various aspects of the economy. Here’s a broad assessment of its impact:
- Simplification and Uniformity:
GST replaced multiple indirect taxes like VAT, service tax, excise duty, etc., bringing uniformity in the tax structure across states. This has simplified tax compliance and reduced the cascading effect of taxes. - Boost to GDP:
GST aimed to create a single, unified Indian market by removing barriers to interstate trade. This has boosted economic growth and GDP by making movement of goods and services across states more efficient. - Increased Tax Compliance:
With its online system and stringent compliance measures, GST has increased tax compliance among businesses. This has widened the tax base and brought many previously unregistered businesses into the formal economy. - Reduction in Tax Evasion:
GST’s invoice matching system and input tax credit mechanism have reduced tax evasion by businesses. It has become harder for businesses to evade taxes by underreporting sales or over-reporting expenses. - Impact on Small Businesses:
While GST has streamlined taxation for large enterprises, it has posed challenges for small businesses due to compliance requirements and technological barriers. However, over time, many small businesses have adapted to the new system. - Inflation and Consumer Prices:
Initially, GST led to some inflationary pressures as tax rates on certain goods and services increased, but over time, as the system stabilized, these effects have moderated. However, the impact on consumer prices varies depending on the sector and the specific goods and services. - Sectoral Impact:
GST has affected different sectors differently. Some sectors like logistics and manufacturing have benefitted from reduced tax burden and streamlined logistics, while others like real estate have faced transitional challenges. - Revenue Implications:
Initially, there were concerns about potential revenue loss for states due to GST implementation. However, over time, revenue collection has improved, although there have been fluctuations due to various factors like rate revisions and economic slowdowns.
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