Impact of GST on Indirect Tax Revenue: Appraisal of Literature

Abstract

Tax constitutes a major source of revenue to the Government for public spending. Among different types of taxes, indirect tax contributes a substantial part in the total revenue. There were more than 27 types of indirect taxes in India till July 2017. Further, the indirect tax system in India was very complex and cumbersome to comply with and resulted in disparity of prices of goods and services in different states. The introduction of goods and services tax, from 1st July 2017, is the single biggest indirect tax reforms undertaken since our independence to promote commerce and industry. Further, it brought all indirect taxes into one single tax to mitigate cascading or double taxation problems and pave the way for a common national market. From the consumer point of view, the biggest advantage would be in terms of a reduction in the overall tax burden on goods, which was estimated to be around 25–30%. Introduction of GST would also make Indian products competitive in the domestic and international markets. Studies show that this would have a positive impact on economic growth. The objective of this paper is to study the related literatures on goods and services tax in India. It also aims to identify the problems in Goods and Services Tax system even after 1 year since it was implemented.