Input Tax Credit & Unified Tax: The Twin Pillars Of India's GST Success
- IJLLR Journal
- Jun 29
- 2 min read
Shreya Chandrakar, B.A.LL.B.(Hons.), Narsee Monjee Institute of Management Studies, Indore.
ABSTRACT
In this article, I propose that Input Tax Credit & Unified Tax regime are the backbone of GST regime in India. It is now, a new normal to say that GST has benefitted both the taxpayers as well as country as a whole. It is with the onset of GST; taxpayers are now relieved to an extent. This revolution of indirect taxation system in India is possible due to the provisions of Input Tax Credit and the vision of Unified Taxation System in the form of “One Nation, One Tax” policy. Firstly, claiming Input Tax Credits has reduced the burden of the taxpayers (mainly businesses) along with an ease of doing business. This has resulted into the removal of cascading effect (tax on tax) of tax. Secondly, a comparison with the previous tax system reveals how GST has dismantled inter-state trade barriers and significantly expanded the taxpayer base. It has replaced a tangled web of indirect taxes such as, excise duty, VAT, service tax, octroi and entry taxes with a single, destination- based tax. That is, under the newly introduced regime, Central (CGST), State (SGST) and Integrated (IGST) taxes work together. This further led to a unified tax structure among states. Thirdly, an improved revenue for government as tax is one of the main sources for government to generate revenue, which is further utilised by the government for welfare of the public. The article analyses available statistics along with suitable illustrations in an attempt to prove how the onset of Input Tax Credit and Unified tax system have proved to be a gamechanger in India’s journey towards its policy for taxation. To substantiate the analysis, revenue collection trends before and after the implementation of GST have also been graphically represented.
Keywords: GST, tax rate, cascading effect, VAT, Excise duty, ITC
