Effects of GST on Indian Economy.
                     Effects of GST on 
Indian Economy
What is GST?
GST is India’s biggest tax reform, basically it 
is a ‘one nation, one tax’ concept of unified 
taxation system, doing away all indirect, local 
and state taxes.
power2sme.com
When was it implemented?
GST was launched in July 2017 by President of 
India, Pranab Mukherjee  and PM Narendra Modi. 
The idea was first mooted by then finance 
minister P. Chidambaram in 2007
hrblock.com
Short-term impact
The impact of GST is that the prices of 
commodities have risen due to slightly higher 
rates of tax. The cost of compliance for small 
scale manufacturers have risen.
axiscapital.com
Fewer taxes
The positive impact of GST is that the two 
constituents, Central Goods & Service Tax (CGST) 
and State Goods & Service Tax (SGST) have 
replaced the many number of taxes which were 
present.
sme.com
Unified market
Before the implementation of GST, different states 
had their own tax policies. Now with GST, all the 
states will charge the same amount of taxes, 
unifying the Indian market.
milleniumpost.com
Impact on Real Estate
GST in India has negatively impacted the real 
estate market with 8% increase in costs for new 
homes and has lead to reduction in demand by 
12%, which has severely affected the real estate 
sector.
commonfloor.com
Impact on MSME
The MSME (Micro, Small and Medium Enterprises) 
were hard hit due to demonetization resulting in a 
loss of 1.5 million jobs and a poorly designed GST 
has increased their woes, adding a significant layer 
of uncertainty.
dnaindia.com
Tax compensation for states
GST assured tax compensation for the states, 
but the government had to delay providing it 
and has resulted in shortfall of revenue for the 
states by upto 14% 
Challenges
The GST Council meeting in December 2019 
addressed the issues of shortfall in revenue 
collection, modification in rate structure, 
compensation payment and the lack of a tax credit 
mechanism.
 The council expressed the need for further reforms 
to the GST system.