Currently many taxes are applicable from the time the raw material is purchased till the time the product reaches the consumer. This makes the product/service expensive. In every state, there are different VAT rates and therefore during inter-state sale/purchase, the product gets priced differently. In the end, it is the consumer who bears the tax in the form of high prices. Also, currently there are three taxes that the business owners must comply with- VAT (State level), Excise (Central level), and Service Tax. Since GST is one tax rate, all these hurdles will be simplified and the prices in some sectors might come down.
Different rates are necessary because taxing luxury goods and spices at the same rate would not be appropriate. Care is being taken to put goods and services in the slab rates that are the closest to their current tax rates
A well planned and implemented tax policy can bring about qualitative change in tax system of a nation. GST- India is expected to bring about this qualitative changes leading to business reforms in India. GST has both positive and negative impact at micro level on the average Indian. GST, being a simplified tax policy, removes cascading effect of taxes leading to cheaper cost of various products (eg. FMCG), more job opportunities, more transparency, reduction of tax burden on end consumers, improvement in Indian economy in long run, etc. On the contrary it may have few drawbacks such as initial inflation leading to higher prices of products, rescheduling budgets, higher compliance cost, etc. At a macro level, GST will greatly influence Indian economy, leading to increased FDI, increased in overall government revenue, seamless flow of credits, transparency in tax system, increased exports, etc. All in all, GST is expected to be a boon for nation like India.