GST in India and its Impact on Indian Economy

Purpose: - Traditionally India's tax regime relied heavily on indirect taxes. Revenue from indirect taxes was the major source of tax revenue till tax reforms were undertaken during nineties. The major argument put forth for heavy reliance on indirect taxes was that the India's majority of population was poor and thus widening base of direct taxes had inherent limitations. But the Indian system of indirect taxation is characterized by cascading, distorting tax on production of goods and services which leads to hampering productivity and slower economic growth. There are endless taxes in present system few levied by Centre and rest levied by state, to remove this multiplicity of taxes and reducing the burden of the tax payer a simple tax is required and that is Goods and Service Tax (GST). This paper throws an insight into the Goods and Service Tax concept and its impact on Indian economy. Design/Research Methodology/Approach: - The paper is based on secondary data. The paper is based on extant literature and internet sources have been used. The various articles, researches, government reports, newspapers, magazines, various websites and the information on internet have been studied. Key Findings: - The macroeconomic impact of GST is significant in terms of growth effects, price effects, current account effects and the effect on the budget balance. In developing open economy with growing service sector, a change in the tax mix from income to consumption-based taxes is likely to provide a fruitful source of revenue. The proposed structure will simplify the procedure which will end up with equal opportunity for all the markets and in other hand will leads reduced tax evasion. Research Limitations/Implications: - The present study provides a starting-point for further research in this field. This further can be explained with respect to real benefits in India after successful implementation of GST