Widely seen as the most important and far-reaching indirect tax reform that will eventually impact almost all industries and businesses, the Goods and Services Tax was launched after a long and dramatic drum roll. Brought in as a solution to the country's indirect taxation law that crippled business environment, GST was proposed by Prime Minister Narendra Modi's government to subsume all taxes and create just one rate for the entire nation.
The new tax regime had a profound effect on the way business is being conducted, and the way prices are determined. It affects supply chain optimisation, accounting and tax compliance systems, as also the tax structure, tax incidence, tax computation, tax payment, etc. The automation of compliance procedures, that come under the government's Digital India reduces errors and increases efficiency.
Earlier this year, Finance Ministry Arun Jaitley said that once the GST is implemented, the “combination of a more digitised economy with a more efficient tax system, I am sure will make India look much better. It will make our economy look much cleaner and bigger.” Businesses need to upload their invoices to the GST Network (GSTN) on a regular basis, under the GST. They also need to upload and download various forms from the GSTN thrice a month, every month. This format makes it necessary for the regime to employ technology to run their business and accounting process. It also fares well with the government's efforts to promote digitisation to unlock efficiencies, compliance and growth in the Indian economy. With more businesses coming online, new business opportunities will be created and a vibrant digital economy will be formed. The new GST makes it necessary for businesses to organise themselves better. Compliance requirements under the regime are well-defined and require almost real-time compliance.
Reserve Bank of India Governor Urjit Patel called GST a part of the digitisation move, which, he said, along with the reforms on the information tax side in terms of the processes and operations, have the potential to broaden the tax base considerably. A recent report suggested that India has entered its strongest growth phase and a full blown bull market is yet to play out.
India's steady transition towards a formal economy and digital economy may have been been a result of demonetisation and digitisation. GST has only boosted companies, economy, and jobs, and is set to impact the Indian economy in the next 5-7 years, converting India from a developing economy to a developed economy.
