What are the benefits of GST?


The benefits of GST can be summarized as under:

For business and industry

o Easy compliance: A robust and comprehensive IT

system would be the foundation of the GST regime in

India. Therefore, all tax payer services such as

registrations, returns, payments, etc. would be

available to the taxpayers online, which would make

compliance easy and transparent.

o Uniformity of tax rates and structures: GST will ensure

that indirect tax rates and structures are common

across the country, thereby increasing certainty and


ease of doing business. In other words, GST would

make doing business in the country tax neutral,

irrespective of the choice of place of doing business.

o Removal of cascading: A system of seamless tax-credits

throughout the value-chain, and across boundaries of

States, would ensure that there is minimal cascading of

taxes. This would reduce hidden costs of doing


o Improved competitiveness: Reduction in transaction

costs of doing business would eventually lead to an

improved competitiveness for the trade and industry.

o Gain to manufacturers and exporters: The subsuming

of major Central and State taxes in GST, complete and

comprehensive set-off of input goods and services and

phasing out of Central Sales Tax (CST) would reduce

the cost of locally manufactured goods and services.

This will increase the competitiveness of Indian goods

and services in the international market and give boost

to Indian exports. The uniformity in tax rates and

procedures across the country will also go a long way in

reducing the compliance cost.


 For Central and State Governments

o Simple and easy to administer: Multiple indirect taxes

at the Central and State levels are being replaced by

GST. Backed with a robust end-to-end IT system, GST

would be simpler and easier to administer than all

other indirect taxes of the Centre and State levied so


o Better controls on leakage: GST will result in better tax

compliance due to a robust IT infrastructure. Due to

the seamless transfer of input tax credit from one stage

to another in the chain of value addition, there is an inbuilt

mechanism in the design of GST that would

incentivize tax compliance by traders.

o Higher revenue efficiency: GST is expected to decrease

the cost of collection of tax revenues of the


Government, and will therefore, lead to higher revenue


For the consumer

o Single and transparent tax proportionate to the value of

goods and services: Due to multiple indirect taxes being

levied by the Centre and State, with incomplete or no

input tax credits available at progressive stages of value

addition, the cost of most goods and services in the

country today are laden with many hidden taxes. Under

GST, there would be only one tax from the manufacturer

to the consumer, leading to transparency of taxes paid to

the final consumer.

o Relief in overall tax burden: Because of efficiency gains

and prevention of leakages, the overall tax burden on

most commodities will come down, which will benefit