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Impac O Goods and Se ice Tax on Indian Economy
D . Bhagwa Pandu ang Thaku
Associa e P o esso ,Depa men o Economics,New A s,
Comme ce and Science College Ahilyanaga (Au onomous)
Email.bhagwa h[email p o ec ed]
Manusc ip ID:
JRD -2025(I)-170924
ISSN: 2230-9578
Volume 17
Issue 9(I)|
Pp. 103-106
Sep . 2025
Submi ed: 9 Aug. 2025
Re ised: 20 Aug. 2025
Accep ed: 20 Sep . 2025
Published: 30 Sep . 2025
Abs ac . –
Goods and Se ices Tax popula ly known as GST a single ax on he supply o goods and
se ices, igh om he manu ac u e o he consume . The in oduc ion o Goods and Se ices Tax will be
an impo an s ep in he ield o indi ec ax e o m in India. By consolida ing nume ous cen al and s a e
axes in o one ax, he allows o p e- ax o se ing, i educes he nega i e e ec s o he cascading and
opens he way o a common domes ic ma ke . Goods and Se ices Tax was in oduced in India in 2017
wi h he idea o imposing a uni o m ax ac oss he coun y. The e o e, i is conside ed one o he bigges
ax e o ms India has e e unde gone. To unde s and he impac o Goods and Se ices Tax on he Indian
economy as a whole, we i s need o unde s and wha Goods and Se ices Tax is and how i is applied. In
his esea ch a icle, an a emp has been made o e iew he impac o he implemen a ion o Goods and
Se ices Tax on he Indian economy.
Keywo ds.
Concep and De ini ion o Goods and Se ices Tax, Implemen a ion o Goods and Se ices Tax
in India, Fea u e o Goods and Se ices Tax, Bene i s o Goods and Se ices Tax and Impac o Goods and
Se ices Tax in Indian Economy.
In oduc ion. –
A al Biha i Vajpayee is known as he a he o Goods and Se ices Tax. Goods and
Se ices Tax is an indi ec ax le ied in India on he supply o goods and se ices. This is a
comp ehensi e, mul i-le el loca ion-based ax. As i is mul i-s age, Goods and Se ices Tax is
le ied a each s age o he p oduc ion p ocess, bu i is in ended o be eimbu sed o all pa ies a
a ious s ages o p oduc ion excep he inal consume and is subjec o consump ion ax a he
han excise ax. Goods and Se ices Tax eplace se e al exis ing axes imposed by ede al and
s a e go e nmen s. Goods and Se ices Tax is a b oad-spec um ie ed ax egime ha applies o
he sale o goods and se ices. The main pu pose o his ax egime is o cu b he cascading
e ec o o he indi ec axes and i will apply ac oss India. which has eplaced many indi ec
axes in India such as he excise du y, VAT, se ices ax, e c.
Meaning o Goods and Se ices Tax. -
Goods and Se ices Tax is a ax sys em whe e a single ax is applied o he sale o
goods and se ices. I eplaced mul iple indi ec axes like VAT, se ice ax, and excise du y o
make he ax sys em simple and mo e uni ied. A e subsuming majo i y indi ec axes, Goods
and Se ices Tax is a single domes ic indi ec ax law o he en i e coun y. In o he wo ds,
Goods and Se ice Tax is le ied on he supply o goods and se ices
Quick Response Code:
Websi e:
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DOI:
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Add ess o co espondence:
D . Bhagwa Pandu ang Thaku , Associa e P o esso ,Depa men o Economics,New A s,
Comme ce and Science College Ahilyanaga
How o ci e his a icle:
B.P. Thaku , (2025). Impac O Goods and Se ice Tax on Indian Economy , Jou nal o
Resea ch & De elopmen , 17(9(I)),1 03-106
O iginal A icle
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Goods and Se ices Tax Law in India a e a comp ehensi e, mul i-s age, des ina ion-based ax ha is le ied on e e y
alue addi ion.
De ini ion o Goods and Se ices Tax. –
1) “Goods and Se ices Tax is known as he Goods and Se ices ax. I is an indi ec ax. I
means he ul ima e bu den o Goods and Se ices Tax is on he consume ”.
2) “Acco ding o new a icle 366(12A), "Goods and se ice ax means any ax on supply o
goods o se ices o bo h excep axes on he supply o he alcoholic liquo o human
consump ion."
3) “A Goods and Se ices Tax is a alue-added ax le ied on goods and se ices and included
in he p ice o a p oduc ”.
Implemen a ion o Goods and Se ices Tax in India. -
The Goods and Se ice Tax Ac was passed in he Pa liamen on 29 h Ma ch 2017 and came in o e ec on
1s July 2017.India became he 161s coun y in he wo ld o adop GST wi h e ec om July 1s , 2017. The aim o
in oducing GST was o simpli y he indi ec ax egime in he coun y wi h he mo o o ‘One na ion, one ax’. India
has adop ed he ‘Dual GST’ model which means he cen al go e nmen as well as he s a e go e nmen will le y GST
simul aneously. Goods and Se ices Tax is le ied on he supply o goods and se ices. Depending on he ype o
supply, he e a e 3 axes ha a e le ied on goods and se ices – Cen al Goods and Se ices Tax (CGST), S a e Goods
and Se ices Tax (SGST), and In eg a ed Goods and Se ices Tax (IGST). Ra es o GST in India a e 0%, 5%, 12%,
18% and 28%.
Objec i es o he S udy. –
The objec i es o he s udy a e as ollows.
1) To unde s and he concep o Goods and Se ices Tax
2) To s udy he ea u es o Goods and Se ices Tax
3) To know he bene i s o Goods and Se ices Tax
4) To s udy he impac o Goods and Se ices Tax on India
Resea ch Me hodology. -
The s udy is based on explo a o y esea ch and based on seconda y da a o jou nals, a icles,
newspape s and magazines. Seconda y da a was ex ensi ely used o he s udy.
Fea u es o Goods and Se ices Tax in India. -
The salien ea u es o Goods and Se ices Tax in India ha e been highligh ed below:
1) Supply as he Base. -
Goods and Se ices Tax would be applicable on “supply” o goods o se ices as agains he e s while
concep o ax on he manu ac u e o goods o on sale o goods o on p o ision o se ices.
2) Dual GST. -
The Cen e and he S a es would simul aneously le y ax on a common base. The GST o be le ied by he
Cen e would be called Cen al GST (CGST) and he GST o be le ied by he S a es (including Union e i o ies wi h
legisla u e) would be called S a e GST (SGST). Union e i o ies wi hou legisla u e would le y Union e i o y GST
(UTGST).
3) In e -S a e supply. -
An in eg a ed Goods and Se ices Tax (IGST) would be le ied on in e -S a e supply o goods o se ices.
This would be collec ed by he Cen e so ha he c edi chain is no dis up ed. Impo s o goods and se ices would be
ea ed as in e -S a e supplies and would be subjec o IGST.
4) Elec onic Filing o Re u ns. -
The e will be elec onic iling o e u ns by di e en class o pe sons a di e en cu -o da es. Va ious
modes o paymen o ax a ailable o he axpaye including in e ne banking, debi /c edi ca d and Na ional Elec onic
Funds T ans e (NEFT)/Real Time G oss Se lemen (RTGS).
5) Re und. -
Re und o ax can be sough by axpaye o by any o he pe son who has bo ne he incidence o ax wi hin
wo yea s om he ele an da e. Re und is o be g an ed wi hin 60 days om he da e o eceip o comple e
applica ion and in e es is payable i e und is no sanc ioned wi hin 60 days.
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Bene i s o Goods and Se ices Tax. -
The implemen a ion o Goods and Se ices Tax is expec ed o b ing in a ious bene i s as discussed below:
1) Dynamic Common Ma ke . -
Goods and Se ices Tax would make India a dynamic common ma ke and esul in gene a ion o posi i e
ex e nali ies. By ensu ing uni o mi y o indi ec ax a es ac oss he coun y, i will subs an ially imp o e he ease o
doing business.
2) E iciency. -
Subsuming o all majo indi ec axes will esul in he emo al o ine icien axes. Wi h as single ax o be
paid, manu ac u e s will become mo e compe i i e and his could lead o g ow h in expo s.
3) Reduced Compliance Cos s. -
Ha moniza ion o ax a es and laws along wi h seamless inpu ax c edi s and a sound IT in as uc u e is
expec ed o lead o educed compliance cos s. As all he axpaye se ices like egis a ions, paymen s, e u ns e c. will
be a ailable online, he compliance p ocess would become simple .
4) Reduc ion in Tax E asion. -
Uni o m a es o axa ion would educe he incen i e o ax e asion by elimina ing a e a bi age
oppo uni ies be ween neighbo ing s a es and ha be ween in a-S a e and in e -S a e sales.
5) Encou ages Sa ings and In es men . -
As Goods and Se ices Tax is a ax on consump ion and no on income, so he ax sys em inhe en ly
encou ages sa ings and in es men s ins ead o consump ion. Fu he , inpu ax c edi would lead o a dec ease in he
cos o capi al goods and p o ide boos o in es men s.
6) Bene i s o Consume s. -
The inal p ice o goods is expec ed o be lowe due o seamless low o inpu ax c edi be ween he
manu ac u e , e aile and supplie o se ices. A e age ax bu den on companies is likely o come down which is
expec ed o educe p ices and hence bene i he consume .
Impac O Goods and Se ice Tax on Indian Economy. -
The impac o he implemen a ion o Goods and Se ices Tax on he Indian economy can be di ided in o
wo g oups. The dis ibu ion is shown as ollows.
A) Posi i e Impac s o Goods and Se ices Tax on he Indian Economy. -
Following a e he posi i e impac s o Goods and Se ices Tax on Indian economy.
1) S eamlined Tax Sys em. -
Goods and Se ices Tax s eamlined he ax sys em by eplacing mul iple indi ec axes wi h a single ax,
educing complexi y and making compliance mo e manageable o companies.
2) S ong Foo hold in In e na ional Ma ke s. -
Expo s all in o he ca ego y o ze o- a ed supply unde Goods and Se ices Tax. The e o e, he goods
ha a e expo ed om India a e ax- ee. As a esul , Indian goods became mo e compe i i e in he in e na ional
ma ke s.
3) Inc eased Fo eign In es men . -
Goods and Se ices Tax has made India a single ma ke and inc eased o eign in es men in o India. Due o
cos sa ings, goods manu ac u ed in India a e becoming mo e compe i i e in in e na ional ma ke s, leading o g ow h
in expo s. The in oduc ion o Goods and Se ices Tax will b ing India in o compliance wi h in e na ional ax
s anda ds and make i easie o Indian companies o sell in he global ma ke .
4) Inc ease in Go e nmen Re enue. -
Goods and Se ices Tax ha e a wide base which means i co e s a ious goods and se ices unde he ax
b acke . The e o e, Goods and Se ices Tax has led o an inc ease in he ax e enue o he go e nmen .
5) Reduce Cos o Doing Business. -
Goods and Se ices Tax has changed VAT ac oss India. You no longe ha e o pay di e en ax amoun s
o each s a e. We ha e al eady abolished a ious axes and du ies in ou company as his is he ax sys em in all s a es
o India.
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6) Reduc ion o Tax Bu den. -
By emo ing he cascading impac o axes, he Goods and Se ices Tax aim o lessen he ax bu den on
consume s and businesses. Consume s ha e bene i ed om educed p ices o goods and se ices due o he e icien
inpu ax c edi mechanism.
B) Nega i e Impac s o Goods and Se ices Tax on he Indian Economy. -
No doub Goods and Se ices Tax has come a long way in boos ing he g ow h o he Indian economy, bu
i has some ill e ec s as well. Following a e he nega i e impac s o Goods and Se ices Tax on he Indian economy.
1) Impac on Small Fi ms. -
Implemen ing he Goods and Se ices Tax placed a signi ican adjus men load on small i ms, which
disp opo iona ely impac ed sec o s ha had enjoyed h eshold exemp ions o we e exemp om speci ic axes.
Compliance cos s, including in es ing in echnology and p o essional se ices, inc eased.
2) In la ion. -
Despi e being a single ax, Goods and Se ices Tax inc eases he p ice o goods and se ices. In pa icula ,
in la ion can be no iced in non- ood i ems which a e way cos lie han be o e. Righ a e he implemen a ion o Goods
and Se ices Tax in India, he Consume P ice Index inc eased by app ox. 1%. Consume P ice Index is an index ha
measu es changes in p ices o goods and se ices ha a e pu chased by households in gene al.
3) Reg essi e Taxa ion Sys em. -
Goods and Se ices Tax is a eg essi e ax i.e.; e e yone has o pay he same amoun o ax i espec i e o
his income le el. The e o e, i nega i ely impac s people belonging o low-income g oups.
4) Real Es a e P ices. -
The implemen a ion o Goods and Se ices Tax may signi ican ly a ec he eal es a e ma ke . Buye s will
now ha e o pay an 18% ax on eal es a e se ices. As a esul , he ma ke o eal es a e is es ima ed o dec ease a e
Goods and Se ices Tax.
5) Highe P ices o Luxu y P oduc s. -
B anded jewel y and clo hes, and elecom se ices would become expensi e in he Goods and Se ices Tax
egime. This is because he Goods and Se ices Tax a e o a luxu y p oduc is highe han he applicable a es in he
p e- Goods and Se ices Tax e a.
Conclusion. -
The Goods and Se ices Tax has been launched o achie e a goal o “one na ion one ax”. The Goods and
Se ices Tax, implemen ed in India in 2017, has g ea ly impac ed he economy. I has s eamlined he ax sys em,
leading o inc eased compliance and o maliza ion o he economy. This has boos ed g ow h in indus ies such as
manu ac u ing and logis ics. Howe e , he e ha e been challenges, including inc eased compliance bu dens o small
and medium-sized businesses and empo a y in la iona y p essu es e c. Despi e hese challenges, he o e all impac o
Goods and Se ices Tax has been posi i e, and he Indian economy is expec ed o con inue g owing.
Re e ences. -
1) D . R. Vasan hagopal (2011), “GST in India: A Big Leap in he Indi ec Taxa ion Sys em”, In e na ional
Jou nal o T ade, Economics and Finance, Vol. 2, No. 2, Ap il 2011.
2) Kuma , Ni in (2014). Goods and Se ices Tax in India: A Way Fo wa d. Global Jou nal o
Mul idisciplina y S udies.
3) h p://economic imes.india imes.com/news/economy/policy/a-quick-guide- o-india-gs - a es-in-
2017/a icleshow/58743715.cms’
4) h ps://en.wikipedia.o g/wiki/Goods_and_Se ices_Tax_(India)
5) h ps://www1.deske a.com/in/gs -bene i s-and-impac -on-indian-economy
6) h p://www.gs india.com/abou /
7. h ps://gs .caknowledge.in/impac -o -gs -in-indian-economy/
