What are the objectives of Goods and Services Act and what would be its impact on economic growth?

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Ghissu Editorial · Accepted Answer

GST, in force from 1 July 2017, aims to create a single national market, end tax cascading, simplify compliance and widen the tax base through the GST Council. It aids growth by formalising the economy, raising indirect taxpayers by about 50% and lifting collections to ₹20.18 lakh crore in FY24.

**Introduction**

Implemented in 2017, the Goods and Services Tax (GST) aims to unify India’s indirect tax system, simplify compliance, and enhance revenue efficiency, crucial for India’s $5 trillion economy goal and states like ==Telangana== with strong service sectors.

**Unified Taxation and Cooperative Federalism**

1. **Single National Market Creation**: GST subsumes multiple indirect taxes, eliminating cascading and enabling seamless interstate trade, benefiting ==Telangana== where services contribute 68.6%⟦1⟧ to GSVA, outpacing national averages.  
2. **Simplified Compliance and Administration**: The GST Council ensures cooperative federalism and dynamic tax rate adjustments, improving transparency and reducing litigation.

**Implementation Challenges and Economic Outcomes**

3. **Impact⟦2⟧ on Economic Growth⟦3⟧**: GST improved ease of doing business (India rose from 142nd to 63rd), formal sector payroll share is 53%, and services sector grew 7.6% in FY24; ==Telangana== projects 10.7% GSDP growth for 2025-26, driven by services exports and financial services.  
4. **Fiscal Consolidation and Revenue Stability**: GST collections reached ₹20.18 lakh crore in FY24, an 11.7% increase, providing stable revenue for infrastructure and social services investment.

**Way Forward**

5. **Rationalize GST Rates and Strengthen IT**: Streamline tax slabs and enhance digital platforms for compliance and policy responsiveness, aiding MSMEs in ==Telangana==.  
6. **Capacity Building and MSME Support**: Support states technically and integrate GST reforms with schemes like Udyam Assist and Credit Guarantee Fund to boost MSME competitiveness.

**Conclusion**

GST’s unification of indirect taxes and formalization of the economy have enhanced revenue and sectoral growth, with ==Telangana== exemplifying its positive impact, advancing India’s vision of inclusive development and “Sabka Saath, Sabka Vikas.”

What are the objectives of Goods and Services Act and what would be its impact on economic growth?

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