India’s most important economic reforms in the coming years will change the face of Indian economy permanently by amending the existing tax process by a new single now. At the same time, due to the increase in the taxation rate on certain areas may have negative effects.
Here are some affects GST implementations:
- Easier interstate movement of goods: It’s very hassle-free to buy across the States as a unified tax structure will allow smooth movement across the limits of the State. Currently a major pain Interstate logistics area which state tax and Zakat authorities waiting for evacuation by trucks with the long queue is a common sight on the highways. It will soon be found in the past because it would be free movement of goods possible within India. It is estimated that it will cost to reduce the distribution cost by 10-15% and at the same time will reduce the time taken to transport. Due to less transport time along with the list, it will also open a wide base of suppliers, which will push down the cost and more.
- Prevention of Double Taxation: In the current system, VAT, CST, excise, aktoi States and the Central Government is being imposed by the authorities. Some of these taxes are levied on top of other taxes, which have a broad impact. It is quite a hike in the cost of goods by a single payment, it is expected that a significant reduction in the cost of goods (based on the tax rate for GST). The advantage of this cost can be passed.
- Uncertainty on Tax Incentives: Some industries or companies tax incentives (such as all proceeds and discounted VAT tax holiday for 10 years and renewable energy sectors for sale) with the rise of a single tax to abandon these incentives. Government to manage these promotions still is working on a framework. However, the possibility remains that some may see an increase in input costs. Currently most of these promotions many supply chains are designed for. Company to reduce costs they may completely restructure.
- Ease of Doing Business with SME’s: Almost all Indian corporations, no matter how big, although a large number of SMEs in supplier first, SMEs have had so many tax incentives, their complete input on the amount given by the tax credit will be able to claim. It effectively, reduce the burden of tax on them, so will the price. In addition, operates locally first, SMEs, which generally is limited to those States where lack of resources they were based. Now, with a similar Pan India tax, State of SMEs across borders will be much easier to conduct business. GST from the exact implications will reveal the coming months and years. However, it is to improve the business environment in India is too long will come in and it would be quite positive long-term results.