What is the significance of the GST regime according to Nirmala in the context of reducing prices
Nirmala asserts that the GST regime has brought down prices.
According to Nirmala, the Goods and Services Tax (GST) regime has played a significant role in reducing prices. Here are some key points explaining the significance of the GST regime in this context:
- Uniformity: GST has replaced multiple indirect taxes, such as excise duty, service tax, and octroi, with a unified tax structure. This has eliminated the cascading effect of taxes and reduced tax burden on businesses, resulting in price reductions.
- Better Input Tax Credit: Under GST, businesses can claim input tax credit on taxes paid on inputs used in the production or delivery of goods and services. This reduces their overall tax liability, enabling them to pass on benefits in the form of lower prices to consumers.
- Elimination of Entry Tax: The GST regime has abolished entry taxes and octroi, which were earlier levied at state borders. This has eliminated interstate barriers to trade and reduced logistics costs, leading to lower prices.
- Removing Tax on Tax: By removing the cascading effect of taxes, GST ensures that taxes are levied only on the value addition at each stage of the supply chain. This not only simplifies the tax structure but also reduces the overall tax burden, resulting in price reductions.
- Compliance and Transparency: GST has brought in a digital and automated tax administration system, which ensures better compliance. This leads to increased transparency, reduces tax evasion, and helps in creating a more competitive market, thereby putting a downward pressure on prices.
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a year ago