This article was written by Shalaka Srivastva a studnet of Lloyd Law College
Before going to the matter of impact of GST in Indian Economy, let’s welcome GST to market. Finally, after a long wait of 10 years, the Rajya Sabha passed the Goods and Services Tax (GST) which is going to be a reality in next year 2017. This is introduced and the 22nd Constitutional Amendment and it is speculated to be the biggest economic reform in India since the period of liberalization in 1991. Generally, Constitution Amendment Bill is not expected to come into force before mid of 2017. This is beside the fact that states, Indian Inc, and industries will have to prepare themselves for a completely new tax regime. With a huge recognition, it has two components- first is central GST (CGST) and second (SGST) namely called as State GST. Both GST will simultaneously put levy on GST over the value chain. The whole tax part will levied on every single supply of goods and services. With the concern of central part, it would and collect both state and central Goods and Services Tax would levy and these collection collect Goods and Services Tax to all transactions of the State all in a systematic method. GST is really the main and a single tax on the process of supply of goods and services, to the starting right with the manufacturer to the consumer. Its Credits of input taxes are going to paid at each stage and also will be available in the subsequent on the matter of adding the value, which makes GST importantly is a tax on value at each place. As per the bill explain GST, all the taxes will be integrated, and hence, it will be possible to bring a transparency in the levying of taxes and the burden of taxation will be shared equally between manufacturing and services. According to various experts, by the means of implementing the GST, India will gain $15 billion in a year. This is basically because of to promote more exports, create more employment opportunities for public and also to increase boost growth by mixing the whole Indian market with an unified market process by the help of GST which may translate it into lower business costs which is sufficient to everyone. it can also facilitate seamless movement of goods across states and to also reduce the transaction costs of businesses of Indian market.
There are various ways which helps GST to improve the e-commerce in India; GST will be a game changing reform for whole India as well as for Indian economy by the means of developing a common Indian market and reducing the cascading effect on the cost of goods and services. It will also make impact over the tax structure, Tax incidence, Tax computation, Payment, Compliance, Credits utilization and lots of Reporting leading to a complete overhaul of the current indirect tax system. By the source, GST will have a far reaching impact on almost all the aspects of the business operations in the whole country, for instance:-
- Pricing of products and services;
- Supply chain optimization;
- Information technology;
- Accounting and Tax compliance systems.
- GST is all about a simple plan which also includes companies, for both domestic as well as international level. India is the biggest bet when it comes to e-commerce. Pegged at $16 billion in 2015, and it is expected to cross the level of $100 billion by 2020. By an assumption, still, since the beginning e-commerce firms have been facing problems under regulatory taxes and duties differ in each time. After the implementation of GST, it will become simple to manage the CST and VAT problems. Seller on e-commerce will have to pay tax in the state where the delivery happens, like states such as Bihar, Assam and Meghalaya charge entry tax or octroi from a seller if incase he doesn’t belong to that particular state.
According to Hari Menon, CEO, Bigbasket: – “In the long-run the creation of a unified marketplace definitely will reduce the tax burden, inventory cost and logistical issues, and ensure across the country”.
- Moreover, it is necessary for e-commerce firms to make significance changes in the ways of auditing and technology is made by. There should be real-time information to the tax collectors of goods sold in any particular state. It will be an interesting times in front of with a considerable changes to the enterprise resource planning (ERP) systems of e-commerce players to make an accommodate for the requirements of GST. It definitely brings an extent change in doing business in whole India. By the source of Advocacy for best practices, gearing up for changes in processes, training teams and for developing IT systems for being GST compliant are the key areas to be assessed.
- GST enhances the easy way of compliance for business and industry: A robust and comprehensive IT system would be the foundation of the GST regime in India. It will help the tax payer services such as registrations, returns, payments, etc. It would be available to the taxpayers for online, which would make their more compliance easy and transparent.
- Uniformity of tax rates and structures will inanity and increase certainty and ease of doing business.
- A new system of seamless tax-credits throughout the chain-value, and various across boundaries of states, it would ensure that there is minimal cascading of taxes by the removing cascading which would reduce the hidden costs of doing business in India.
- Reduction in the transaction costs for doing business would eventually lead to an improved competitiveness for the trade of India.
- Also establish a collective Gain to manufactures and exporters.
- To improve in better tax compliance due to a robust IT infrastructure is based on the better controls on leakage.
- By the proper higher revenue efficiency, GST is expected to decrease the cost of collection of tax revenues of the government, and therefore, it will lead to higher revenue efficiency for consumer with a clear way of transparency of taxes paid by them.
These are the various factors which increase the e-commerce in India in a very smooth way. According to this GST introduced very faster, Assam became the first state in the country to ratify the constitution Amendment bill on goods and services Tax. And also Bihar becomes the second state to ratify the 122nd constitutional amendment bill. Basically, the main aim for passing this bill is to streamlining the tax structure throughout the nation by subsuming several central and state levies and envisages an efficient taxation system. For whole nation, it is one indirect tax, which will definitely make India one unified common market. GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. So, a good way to startup the market.