What happens to Economy after introduction of GST


What is Goods and Service Tax (GST)

GST, frequently asked Questions


What happens to Economy after introduction of GST


Advantages of GST in India


GST is in the nature of VAT (Value Added Tax). That means tax is levied on value addition. What happens once after introduction of GST?  As discussed, GST is similar to VAT.  Means the GST is estimated on value addition and not on tax on tax.  Here VAT is only for goods, Service Tax is on services and GST is for goods and services.


In this era of information, technology is very difficult to distinguish in many cases which one is goods and which one is services. So the goods and services delivered at the same time for that have to be implemented GST.


What will happen if GST is introduced in our Country?

GST 11

We have seen in the previous example,  how during the regime of central excise and sales tax, or the prima facie  it seemed that the government would get revenue from taxes, but in effect government has been getting much much less tax as revenue.  That is why VAT is being introduced and in VAT, although the tax is reduced, the government is expected more tax revenue.


What are the advantages of introducing GST in India?

  1. A. The cost of goods will reduce.

B.The demand for goods will increase:  When the cost of goods reduces, demand for goods will increase.

  1. GDP growth:   When the demand for goods increase, obviously GDP grows.

     2.  There will be a saving nature at customer side thereby saving rate of country increases. These       savings could be used for additional infrastructure projects. This also results in growing GDP.


3.  The tax collection amount is expected to hike thereby TAX to GDP ratio is expected to grow. 

So, introduction of GST is going to become a win-win situation of economy.  In short if GST is introduced, Indian economy is expected to grow up to 0.9% to 1.5%.  This rate is a huge growth as per Indian economy experts.



Also Read


Click here to know GST rate on Goods and Services


GST Exemption list of goods and services


Find HSN number or Service tariff code for GST


GST registration guidelines


Indian GST Laws


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