Why in news?
One of the major agendas to be accomplished at this year’s Bonn meeting is the Global Stocktake (GST).
Read also:- GST
Global Stocktake (GST)
GST is an exercise that aims to assess the progress being made in the fight against climate change and decide the future course of action to enhance the global effort to bridge the adequacy gap. The 2015 Paris Agreement mandated the GST.
The current Stocktake
The ongoing Stocktake has been underway for more than a year, and the expectation is that it will conclude this year.
The Paris Agreement mandated the first such exercise to happen every five years.
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Significance of GST
Many countries, including India, have implemented the Goods and Services Tax (GST) as a unified indirect tax system.
Its significance lies in several aspects:
- Simplification and Streamlining: GST replaces multiple indirect taxes such as excise duty, service tax, VAT, and others, streamlining the tax structure. It simplifies compliance for businesses by providing a single tax framework.
- Elimination of Cascading Effect: GST eliminates the cascading effect of taxes, also known as “tax on tax.” It ensures that businesses levy taxes only on the value added at each stage of the supply chain, thereby reducing the tax burden and promoting efficiency.
- Unified Market: GST establishes a unified national market by removing inter-state barriers to trade. It enables seamless movement of goods and services across state boundaries, promoting ease of doing business and fostering economic integration.
- Boost to Economic Growth: The implementation of GST aims to boost economic growth by enhancing tax compliance, expanding the tax base, and curbing tax evasion. It also encourages formalization of the economy and facilitates ease of conducting business operations.
- Transparency and Accountability: GST operates on a digital platform, promoting transparency and reducing human interface. It improves the efficiency of tax administration, enables better tracking of transactions. And reduces the scope for corruption and tax evasion.
- Competitive Advantage: GST helps businesses gain a competitive advantage by eliminating the complexity of multiple taxes and enabling more efficient supply chains. It provides a level playing field for businesses, irrespective of their location or size.
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