The present indirect tax arrangement is big obstruction in India’s financial growth and cutthroat competition. Tax blockades in the type of CST, entry tax and limited input tax credit have sectioned the Indian market. Flowing effects of taxes on price make original manufacture less striking. Complicated multiple taxes improve cost of observance. In this condition, the preface of GST is regarded decisive for financial growth.
GST will remove the range of dual taxation in definite segments due to tax argument on a particular transaction is for supplying goods or stipulation of service like licensing of academic properties like copyrights, software, e-commerce and rental.
Whereas the GST will make tax structure simple, it will improve the load of bureaucratic and documentary fulfillment. Number of returns will improve considerably so also the level of data. For example, a real estate developer will have to file 61 returns in a year evaluated to 24 returns currently. Likewise, a taxable person offering services from various states will have to take listing and file return in all states. Presently, a single central listing is needed in such conditions.
GST will also have influence on cash flow and working capital. Both of these in business organizations manage high inventory of goods or products in different states and will be unfavorably impacted as they will have to file GST return at complete rate on stock transfer from one state to another. Presently, CST/VAT is owed on sale and not on stock transfers.