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GST – Challenges and Benefits for the Indian Economy
April 13 2024

Achievers GDPI Workshop: Concept Builder GST- GD topic: GST – Challenges and Benefits for the Indian Economy Benefits –


GST- GD topic- Reduce the tax burden on producers and foster growth through more production. This double taxation prevents manufacturers from producing to their optimum capacity and retards growth. GST would take care of this problem by providing tax credits to the manufacturer.

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Various tax barriers such as check posts and toll plazas lead to a lot of wastage for perishable items being transported, a loss that translated into major costs through a higher need for buffer stocks and warehousing costs as well. A single taxation system could eliminate this roadblock for them.

Single taxation on producers would also translate into a lower final selling price for the consumer. Also, there will be more transparency in the system as the customers would know exactly how much taxes they are being charged and on what basis.

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GST would add to government revenues by widening the tax base. GST provides credits for the taxes paid by producers earlier in the goods/services chain. This would encourage these producers to buy raw materials from different registered dealers and would bring in more and more vendors and suppliers under the purview of taxation. GST also removes the customs duties applicable to exports. Our competitiveness in foreign markets would increase on account of the lower cost of transactions. The proposed GST regime, which will subsume most central and state-level taxes, is expected to have a single unified list of concessions/exemptions as against the current mammoth exemptions and concessions available across goods and services

Challenges - GST – Challenges and Benefits for the Indian Economy

Consent of States: For implementation, it is critical that the GST bill is passed by the respective state Governments in state assemblies so as to bring a majority. This is a herculean task.

Revenue Neutral Rate (RNR): It is one of the Prominent Factors for its success. We know that in the GST regime, the government revenue would not be the same as compared to the current system. Hence, through RNR Government is to ensure that its revenue remains the same despite giving tax credits.

Threshold Limit in GST: While achieving a broad-based tax structure under GST, Both the empowered committee and Central Government must ensure that lowering of threshold limit should not be a “taxing” burden on small businessmen in the country

Robust IT Network: Government has already incorporated the Goods and service tax network (GSTN). GSTN has to develop a GST portal which ensures technology support for registration, return filing, tax payments, IGST settlements etc. Thus there should be a robust IT backbone

Extensive Training to Tax Administration Staff: GST is absolutely different from the existing system. It, therefore, requires that tax administration staff at both Centre and state be trained properly in terms of concept, legislation and Procedure.

Additional Levy on GST: The Purpose of the additional Levy is to compensate states for loss of revenue while moving to GST. We acknowledge that the fundamental purpose of GST is to make “INDIA” one state where inter-state movement of goods is common. In this situation, it would defeat the very purpose of GST in the country.



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Rahul Singh

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