The GST or the Goods and Service Tax is a long pending indirect tax reform which India has been waiting for, and which is hoped to iron out the wrinkles in the existing tax system. This comprehensive tax policy is expected to be one of the most important reforms in contributing to the India growth story.
GST will increase the resources available for poverty alleviation and development. This will happen indirectly as the tax base becomes more buoyant and as the overall resources of the Central and State governments increase.
It will also boost to the Make In India Campaign as it makes India a single large market by freeing from the current mess of several complex levies along the state lines. With the Implementation of GST, CST would be eliminated, most of the other indirect taxes would be subsumed into the GST, and because it would be applied on imports, the negative protection favoring imports over domestic manufacturing would be eliminated.
The current indirect tax regime is clearly one of the biggest hindrances which have adversely impacted the domestic manufacturing sector as well as flow of foreign investment to the sector and introduction of GST is important to alleviate the situation. It would reduce the cost of manufacturing both from a tax perspective as well as on compliance front.