DefinePK

Abstract

The Goods and Services Tax (GST), which was introduced in India on July 1, 2017, marks one of the most important changes in the nation’s indirect tax framework. It has replaced a complicated array of various indirect taxes imposed by both the Central and State governments—such as VAT, service tax, excise duty, among others—with a consolidated tax system. The introduction of GST aimed to simplify the tax structure, minimize tax evasion, and promote a more cohesive national economy.
A major benefit of GST is the removal of the cascading tax effect, commonly known as "tax on tax." In the previous tax structure, taxes were applied on top of other taxes, which inflated the prices of goods and services. The GST framework enables businesses to claim input tax credits, thus lowering production expenses and boosting business competitiveness.
GST also streamlines tax compliance. Rather than managing multiple taxes with varying rates and procedures, businesses now adhere to a uniform system under GST. This has particularly aided small and medium enterprises (SMEs), alleviating their administrative load and encouraging formalization. Another significant advantage is the enhanced transparency and accountability resulting from the digital nature of GST. The implementation of electronic filing, e-invoicing, and platforms like the Goods and Services Tax Network (GSTN) facilitates real-time transaction tracking, curbing tax evasion and improving revenue collection. It also simplifies audit processes and builds trust between taxpayers and authorities.
Furthermore, GST has enabled the establishment of a unified national market by eliminating inter-state barriers, thereby simplifying operations for businesses across the country. In summary, despite ongoing implementation challenges, GST has provided considerable advantages to the Indian economy, rendering the tax system more efficient, transparent, and conducive to business