Goods and Services Tax till now has proven to be the most important policy yet implemented. Most of the people think that this policy change created a large-scale economic impact since the liberalization. With the GST, India has welcomed uniformity in the tax structure, running efficient tax administration, and bringing improvement in the government finances. At the time of demonetization, the common people face lots of problems, but the real gain comes after the implementation of the formalization and digitization of economy.
The real impact of GST
Doing the massive liquidity was quite impossible that’s why GST was underestimated at the time it was introduced. It became difficult for many companies to shift the approach towards cash, customer interaction and compliance. Still, many of them are struggling to understand GST properly. In terms of competitiveness and productivity, GST showed a positive impact. Above all, it helped in increasing the quality of job, significant reduction in overall tax burden and accessing the formal credit. Taken as a whole, the changes are made best in a short-time. As compared to other industrialized countries, India has around 85% of companies running in unorganized sector.
How it really works?
Many of the time, the informal enterprises took advantages of outdated tax system or local administration level. With the implementation of GST, various business processes are shifted to the formal sector. No doubt the quality of jobs too improved and firms are able to build sustainable enterprises. Now, the financial institutions too are capable of cater the credit requirements of the SMEs and offering higher access to the working capital. The industries related to leather, footwear, textiles, plastics, chemicals and food processing are the real beneficiary of GST.
To run the business effectively, the government eases the burden on SMEs and also minimizes the rate of corporate tax, which is proven to be an additional boost. Another thing is that the productivity also sees an improvement after the relocation of productive resources. By taking a job in tax consultation, accountants and as compliance officers lead the GST to increase up to 11-18% in the formal jobs.
Agreeing to a fact that the demonetization and GST are two big steps took to bring a big transformation in our country. Not only this, there are many domestic firms that became more productive and come close of the foreign competition. The export industry now become more competitive and showing an improvement in terms of seamless taxation, savings in logistics and reduce compliance cost. Now, it is an end of long term tax burden that is minimize up to 25-30% after GST come to govern. We are on a path of making our country globally competitive with others knowing that we have to go a long way. The young generation of our country now gets the better job opportunities in the formal sectors and makes their future.
Truly speaking, we are in middle of a breakthrough change in the economical landscape. Welcome the change and become the part of it to take the maximum advantages.