GST (Goods and Services Act) has been the most awaited indirect tax regime which is expected to be rolled out around July 2017. This tax regime faced a lot of critics initially, however a proper analysis of pros and cons, now every state is adopting the same. GST Let’s have a look at some of those benefits.

Benefits to the consumers


  • Lower incidence of tax on the final goods and services :- Right now, the consumers are bearing the incidence of various indirect taxes on the goods and services purchased. For e.g. when the goods are manufactured, they are subject to basic excise duty. Once these goods are sold in the market, they are subject to VAT. This leads to the tax on tax since there is no set off allowed for excise duty paid by the dealer against the VAT liability incurred. However, under GST regime, tax incidence only from that of the last dealer in the supply chain would be borne by the ultimate consumer. This is because, GST being only one tax which would be levied on goods and services sold, GST paid at any point of time would be allowed to be set off against the GST liability. This will eliminate the tax on tax incidence which was prevailing in the previous tax structure.

  • Lower prices :- GST will bring in free movement of goods and services throughout the country and will also facilitate lower inventory costs due to curbing of toll and entry taxes. This will create a unified market, where effective comparison of goods and services is possible at the national level with no extra effect of taxes. This will benefit the consumer in the form of lower prices.

Benefits to Government

Which Taxes Covered Under GST

  • Drop in tax evasion :- Due to incentivization of the indirect tax structure, GST tax structure will bring in the most of the currently unregistered dealers under the tax net. This is because the dealers can claim input credit for GST paid against GST liability, only if the supplier is registered under GST. This will certainly bring down the tax evasion to a drastic level.

  • Integrated and simplified tax structure :- When the tax structure is simplified, it becomes easier to implement and coordinate the changes and amendments in the tax structure to the tax officials as well as taxpayers. This will not only simplify the tax structure but will also extend the tax base as well. This simplified and unified tax structure will not only prevent the tax evasion by registered dealers and will bring in the unregistered dealers within tax net.

  • Boost to Make in India :- Rankings in “ease of doing business” has risen up as compared to previous data. GST is expected to even push the business procedures and formalities. Simplification of tax structure and incentivization of whole GST regime is hence basically introduced to push up the “Make in India” mission.

Benefits to Dealers

  • Single marketplace :- Since almost all indirect taxes are going to be subsumed by the GST regime, GST itself will be the most unique and single indirect tax levied on goods as well as services. This will facilitate the free movement of goods and services throughout the country (since there will be no different taxes, which are currently levied and which leads to increase in prices of goods and services depending on the location of production and sale of goods and services).

  • Reduction in transportation and inventory costs :-  GST is set to subsume the entry taxes and cess (if not all, then most of them), so it will mean that lesser taxes to enter any state, since the GST paid will be adjusted as input tax credit against GST liability. Most of the time of any transporter is spent at toll booths and check posts, GST transition is expected to bring in smiles for them.

  • Encouragement to E-commerce sector :- E-commerce sector is the most happening industry with high volume sales and deals in mostly FMCG (Fast Moving Consumer Goods). Taxation impact on such activities as well as on the digital platform which just acts as a facilitator for selling the goods has always been a debatable issue from indirect taxes point of view. However, there is no ambiguity in taxation as well as compliances by E-commerce retailers under GST regime. This will reduce the compliance issues and will bring in more conformity in tax adherence and payment.

  • Minimal human interface:- GST regime has come up with compliance mechanisms, though large in numbers, those are fully or mostly online and electronic. For e.g. if any dealer wishes to apply for registration, then he will be needed to file the application for registration online, which will be directed towards the proper GST official. If everything is in order, then registration certificate will be hosted on a website or if not then the requirements or concerns will be shared online in form no GST REG-03 on GST portal. Minimum human intervention will reduce the harassment by GST officials and will facilitate hassle-free and faster processing of registration, returns, and other compliance formalities.

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