The saying “less is more” aptly describes the impact the Goods and Services Tax (GST) is to have on the Indian economy. Its aim is to replace India’s many taxes with a single one, having multiple slabs.
Aside from demonetisation and the Finance Bill, it is the most significant shakedown the NDA government have laid on the economy. So far, lacking a singular taxation regime, both the Centre and the States have levied their own taxes wherever applicable. This led to a system where manufacturers were taxed to a cascading effect; paying taxes on goods that were already taxed.
Both the government and the consumer bore this burden. Consumers faced multiple taxes levied on a single bill while the government faced a populace that largely avoided paying tax altogether. And the cost inter-state trade was so high (in terms of time and money), that in many cases it was cheaper to import goods than to buy them from a neighbouring state.
The Goods and Services Tax was promised by many governments, with the aim of replacing multiple taxes with a single one. From July 1, 2017, it will be a reality, as millions of merchants across the country switch to the new system.
But fewer taxes are not necessarily adding up to lesser taxation.
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