Impact of Goods and Service Tax
Indian system of taxation of goods and services is characterized by cascading, distortionary tax on production of goods and services which leads to miss-allocation of resources, hampering productivity and slower economic growth. To remove this hurdle, a pure and simple tax system like GST (Goods and Service Tax) is need of the hour in the country.
An ideal tax system collects taxes at various stages of manufacturing, supply, wholesale, retailing and lastly at the final consumption. It is based on the add-on value by the manufacturer, supplier and retailer at each stage of the value chain. Tax paid at each stage is based on the amount of value added and not on the entire amount. But under the GST there will be only one uniform tax structure so that there is no need to pay additional charge (i.e. excise duty). From the above example we can see that by implementation of GST, concept of double taxation will be eliminated as there will be only one uniform tax structure.