Page 1 of 10

European Journal of Business &

Social Sciences

Available at https://ejbss.org/

ISSN: 2235-767X

Volume 07 Issue 03

March 2019

Available online: https://ejbss.org/ P a g e | 523

Impact of GOODS AND SERVICES TAX on Indian Economy

URMILA

Assistant Professor, Faculty of Commerce,

Ch. Devi Lal Memorial Girls College Sewah Panipat

ABSTRACT

Goods and Service Tax is an indirect tax levied on the supply of goods and services. GST Law

has replaced many indirect tax laws that previously existed in India.GST is one indirect tax for

the entire country. There are 3 taxes applicable under GST: CGST, SGST & IGST. GST will

mainly remove the Cascading effect on the sale of goods and services. Removal of cascading

effect will directly impact the cost of goods. GST also known as the Goods and Services Tax is

defined as the giant indirect tax structure designed to support and enhances the economic growth

of a country. More than 150 countries have implemented GST so far. However, the idea of GST

in India was mooted by Vajpayee government in 2000 and the constitutional amendment for the

same was passed by the Lok Sabha on 6th May 2015 but is yet to be ratified by the Rajya Sabha.

However, there is a huge hue and cry against its implementation.

In this paper an attempt has been made to see the benefits of GST & its current status in India.

Paper gives knowledge about GST and a flawless implementation would trigger an increase in

the government revenue and a surge in the Indian economy. Present Indian tax system is very

complex as it includes cascading effects of tax. GST, being one single indirect tax scheme for the

entire nation will attempt to make India united common market. India needs a strong and defined

system of GST to overcome the shortcomings of VAT. This paper is an analysis of GST concept,

benefit and impact on Indian economy.

Key words: Goods and Services Tax, Dual GST, Indian Economy and Value Added Tax.

Page 2 of 10

European Journal of Business &

Social Sciences

Available at https://ejbss.org/

ISSN: 2235-767X

Volume 07 Issue 03

March 2019

Available online: https://ejbss.org/ P a g e | 524

INTRODUCTION

GST, or the Goods and Services Tax are a unified tax which is levied on the value added for the

delivery of goods and services. On 1st July 2017 at midnight, the President of India, Sir Pranab

Mukherjee and Prime Minister Sir Narendra Modi launched GST all over India including Jammu

& Kashmir. However, there have been many changes made to the rates of GST, the latest being

on 18th January 2018.

In a short span of time, all the states approved their State GST (SGST) laws. Union territories

with legislatures, i.e., Delhi and Puducherry, have adopted the SGST Act and the other 5 union

territories without legislatures have adopted the UTGST Act.

The idea of introducing GST was first proposed by the then Union Finance Minister, P.

Chidambaram in his Budget for 2006-07. The discussion on GST took specific decision with the

introduction of the Constitutional Bill (122nd Amendment), 2014. The Bill was passed by the

Parliament on 8 August 2016. This was followed by the approval of the Bill by more than 15

states. On 12 April 2017, the Central Government enacted four GST bills:

 Central GST (CGST) Bill

 Integrated GST (IGST) Bill

 Union Territory GST (UTGST) Bill

 The GST (Compensation to States) Bill

In the Indian economy, the service sector contributes to over 55%. Separate taxation of goods

and services is neither viable nor desirable. GST in India had been introduced to reduce the tax

burden that’s on both companies and consumers. In the previous system, there were multiple

taxes added at each stage of the supply chain, without taking credit for taxes paid at previous

stages. As a result, the end cost of the product does not clearly show the actual cost of the

product and how much tax was applied. The tax structure was complex. GST integrated most of

the taxes into one single tax, where the consumers are benefited. This method provides credit

paid on the purchase of goods and services, which can be offset with the tax to be paid on the

supply of goods and services. As a result, this reduces the overall cost, with the end customer

paying less.

Page 3 of 10

European Journal of Business &

Social Sciences

Available at https://ejbss.org/

ISSN: 2235-767X

Volume 07 Issue 03

March 2019

Available online: https://ejbss.org/ P a g e | 525

REVIEW OF LITERATURE

 Dr. G Sunitha and P.Satischandra had highlighted the concept of GST, its effect on

Indian economy and the benefits in their paper “Goods and Service Tax (GST): As a new

path in Tax Reforms in Indian Economy”.

 Dr. R. Vasanthagopal highlighted that GST will definitely will be a step towards a

growing economy in his paper “GST in India: A Big Leap in the Indirect Taxation

System” in the year 2011.

 Garg concluded in his article “Basic Concepts and Features of Good and Services Tax in

India” that GST will make Indian economy stronger and will lead towards economic

development.

 Nitin Kumar (2014) mentioned in his research paper that implementation of GST will try

to remove all the shortcomings of present tax structure in India in his research paper

“Goods and Service Tax in India-A Way Forward”

 Rathod M (2017) in his paper “An Overview of Goods and Service Tax (GST) In India”

concludes that GST will be a step towards a developed India benefiting to many parties

and entire nation.

OBJECTIVES OF THE STUDY

The objective of the study is to understand the concept, benefits and impact of GST on Indian

Economy.

 To collect information of current tax system and analysis of tax by GST

 To study the concept of Goods and Services Tax (GST) and its impact on Indian

economy.

 To understand how GST will work in India.

 To know the benefits of GST in India context.

RESEARCH METHODOLOGY