Some states are more developed in India than other states. Certain states have well-developed Industries, transport and communication systems and have basic facilities such as electricity and drinking water for its people. Some other states do not have these facilities. The main problem is the lack of infrastructure. The governments of the state which are backward cannot provide facilities such as electricity, water, proper transportation or communications. The reason for this is the lesser amount of tax collected in these states. As the Government Revenue is limited, they cannot provide good facilities. Industries are not established in states without proper facilities. So, ultimately Tax Revenue plays an important role in the development of the state.
According to the previous tax system, tax revenue went to the state where the goods were manufactured. This helped the developed state to develop further. But, after implementation of GST, tax revenue would go to the state where the goods are consumed. Backward States which have more population need number of consumer goods. Ultimately, these backward states get tax revenue by the implementation of GST. Increase in revenue would lead to better facilities and development of basic infrastructure. It would further accelerate the investments in the state and promote employment or business opportunities in the backward states.
GST would ensure even development among the states. The Per capita tax returns would be even and so would be the investments and the developments in various states. When the states grow evenly, there are lesser conflicts and troubles. Further, having a single taxation system and similar tax slabs throughout the country would make it easy to do business between the states and would increase the business transactions. Overall, it would lead to more income. In the long run, all this would facilitate India to become a developed economy.