On Friday night, India imposed the largest tax reform on its land, with the introduction of Goods and Services Tax (GST) on Friday night. This is not only a change in the tax system, but it will also make a big difference in the federal structure of the country. The state is going to discard most of its most vital power to impose various types of tax. So what, overall, is our life going to improve? There are several types of taxation systems working in some federal structures. For example, Australia adopted such GST system, in which the central government controls GST and revenue sharing is done between center and states.

Can we gain GST as a tax system across the country? The general answer is that changing the complex structure of indirect taxes will make traders easy to do business across the country. This will increase the investment and then it will increase the country’s economy. Increasing economy will allow citizens to spend more on the clerical work. This is the strongest argument behind implementing GST.

So far, in different states, various types of complex taxes were imposed, which used to work as an obstacle in setting up and expanding businesses. Whatever is simple and easy, should be welcomed. Actually this channel (GST) has to be of profit now. However, it is also true in this regard that the smooth operation of GST will depend on willpower.

Four tariffs have been fixed instead of just one GST rate. Different rates will apply to certain goods and services. From this, the aspiration of comfort in tax collection would hurt him. At the same time, in the states where the business is looking to do, the complexities and costs will increase with each state, along with the requirements of registration in the Central Tax Authority. While GST is expected that the government spending on tax collection will be reduced.

There is a difference in the income and consumption of each state. A calibrated model for estimating revenue neutral rates has come out that if the effective GST rate is 20.1 percent, there will be no change in the revenues of the Tamil Nadu government. But, at a lower rate, its revenue will be reduced. If this rate is more than 20.1 percent then the revenue of all the states will increase after GST. However, research suggests that there is no guarantee of the living standards of the citizens in the big revenue states.