10 Benefits of the GST Bill :
1. Life
gets simpler : GST will replace 17 indirect tax levies and compliance costs
will fall.
2. Revenue
will get a boost : Evasion set to drop. Input tax credit will encourage
suppliers to pay taxes. States and Centre will have dual oversight. The number
of tax exempt goods will decline.
3. A
common market : It's currently fragmented along state lines, pushing costs up
20-30%.
4. Logistics,
Inventory costs will fall : Checks at state borders slow movement of trucks. In
India, they travel 280 km a day compared with 800 km in the US.
5. Investment
boost : For many capital goods, input tax credit is not available. Full input
tax credit under GST will mean a 12-14% drop in the cost of capital goods.
Expected: A 6% rise in capital goods investment, 2% overall.
6. Make
in India : Manufacturing will get more competitive as GST addresses cascading
of tax, inter-state tax, high logistics costs and fragmented market. Increased
protection from imports as GST provides for appropriate countervailing duty.
7. Less
developed states get a lift : The current 2% inter-state levy means production
is kept within a state. Under the GST national market, this can be dispersed,
creating opportunities for others.
8. Manufactured
goods could become cheaper : Lower logistics and tax costs.
9. GDP Lift : HSBC estimates an 80 basis point
rise in GDP growth over 3-5 years. NCAER pegs this at 0.9-1.7% thanks to the
elimination of tax cascading.
10. Freeing up online : State restrictions and levies
have complicated ecommerce. Some sellers do not even ship to particular states.
All this will end with GST.
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