The Swot Analysis framework is a very important and useful tool to use in marketing management and other business applications.  As a basic tool its mastery is a fundamental requirement for the marketer, entrepreneur or business persons.

What is a SWOT Analysis?

As per Wikipedia Swot Analysis (alternatively SWOT matrix) is an acronym for strengths, weaknesses, opportunities, and threats and is a structured planning method that evaluates those four elements of an organization, project or business venture. A SWOT analysis can be carried out for a company, product, place, industry, or person. 

It involves scaning of the internal and external environment is an important part of the strategic planning process.  Environmental factors internal to the firm or Country usually can be classified as strengths (S) or weaknesses (W), and those external to the firm or Country can be classified as opportunities (O) or threats (T).  Such an analysis of the strategic environment is referred to as a SWOT analysis.

Why is SWOT Analysis Done?

The SWOT analysis provides information that is helpful in matching the  resources and capabilities to the competitive environment in which it operates. It helps in analyzing your organization’s strengths and weaknesses, and the opportunities and threats that you face. It helps you focus on your strengths, minimize threats, and take the greatest possible advantage of opportunities available to you.

Through this article I am trying to make a SWOT analysis of the introduction of GST Act in India by the Modi Government. The  Goods and Service Tax Bill or GST Bill was introduced to bring reform in the indirect tax regime within India. With  the implementation of GST in India, the government is hoping to create a common Indian market and thereby to reduce the cascading effect of tax on the cost of goods and services.

Strengths of Goods and Service Tax in India

The strengths in the SWOT analysis are its resources and capabilities that can be used for developing a competitive advantage over others. Some of the Strength of  GST Act are

• The GST Tax is applicable on all goods and services except some exempted products mentioned in the exemption list of the Act
• GST will subsume taxes like Central Excise Duty (1944), Central Sales Tax (1956) Service Tax (1994) and a host of state levied taxes including Value Added Tax (VAT)
• It will drop out the cascading effects of tax on production and distribution of goods and services
• Better Compliance and online submission of details would result in less paper work.
• This would eventually lead to more tax revenue
• GST would be dual taxation system. It would be charged intra-State by Central and State governments. It would be called CGST (Central Goods and Service Tax) and SGST (State Goods and Service Tax) thereby eliminating loss of revenue of states and Central Government

Weaknesses of Goods and Service Tax in India

The absence of certain strengths are a weakness as per SWOT Analysis.

• The duel model of GST results in complicated billing and reconciliation.
• The system is fully technology driven, but India is a developing country where people are not habitual of technology.
• GST is a subsume of various States and Central taxes but many more are left at the discretion of State Government.

Opportunities of Goods and Service Tax in India

The external environmental analysis may reveal certain new opportunities for profit and growth. Some opportunities include:

• The rates of tax are set at ground level which will help States and Unions to collect more revenue. This will result in Growth of Revenue for State and Central Government
• GST will reduce average tax burden of consumers. They will be certain about their taxes which will reduce evasion of taxes.
• GST can provide the opportunity of Corruption Free Indian Revenue Services. This may help in uprooting the Black money economy and bringing all under traders and Service providers under the Tax regime.
• Low prices of manufactured products
• Increase in GDP
• Increase in export due to price competitiveness

Threats of Goods and Service Tax in India

Changes in the external environmental also may present threats to the system. Some of such threats include:

• The mechanism in GST is still complicated, it cannot completely eliminate black money and tax evasion
• Initial Burden on Consumers due to a temporary increase of cost of goods and services.
• GSTC (Goods and Service Tax Council) will set the benchmark for resolving the dispute on recommendations of GSTC. It means GSTC will lay down the criteria for GSTC itself. It is against the principle of natural justice.
• GST is not a guarantee in itself that it would not be influenced by political parties and politicians will not use it as a win-loss game.

The introduction of GST is a historical reform in Indian taxation system. It consolidates comprehensive Central and State taxes and allow set-off of prior-stage taxes. It will tone down the cascading affect and pave the way of growth.

Read more on GST Impact on Banking,Insurance & Investments,

WHY GST ?,  GST SAGA