The existence of multiple tax laws in the earlier tax system created a lot of confusion and hardship for businesses in almost all sectors of the industry.
Most businesses were forced to deal with tax authorities under Central, State and Local level administrations. This situation made it binding for businesses to pay taxes to these multiple tax authorities. Besides that, they had to keep different books of accounts, file different sets of returns and also keep in pace with the procedural and legal needs of these multiple authorities.
The implementation of the Goods and Services tax (GST) is a kind of lifeline to these businesses. GST resolved the main issue of bearing with multiple tax authorities as it brought all the Central and State tax laws under one banner i.e. GST.
Multiple issues created by the old tax system was resolved in one stroke. GST is therefore considered a revolution in the indirect tax structure of India as it brings the whole country under one nation, one tax system.
All Central and State taxes are now amalgamated under the GST. The taxes of the Central Govt. are subsumed under CGST (Central GST) and taxes of State Govt. are subsumed under SGST (State GST). This new tax structure will simplify the tax payment process for businesses.
GST will simplify and bring in an efficient tax collection system for the authorities. GST is thus aimed to generate higher output for industries in future.
GST is scheduled to bring bigger tax revenues for both Central and State Government over a period of time. It will bring many industries that are in informal sector today, to formal sector.
The cumulative effect of all these factors will result in creating higher growth rate which will lead to more employment opportunities for people. Notwithstanding these benefits, the implementation of GST is likely to cause many hiccups and cause high administrative costs, at least in its initial stages.