Since the Goods and Services Tax (GST) was implemented, a number of feedbacks have been received regarding its advantages and disadvantages. At the national level, the GST operates as a Value Added Tax (VAT) on goods as well as services, and is designed as a comprehensive indirect tax levy. All indirect taxes imposed by the Indian Central and State governments on goods and services will be replaced by this tax. However, GST also has some demerits, despite serving as a historical tax reform in India. Let us examine the advantages and disadvantages of GST taxation in this article. Following are the gst advantages.
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The GST Advantages
Table of Contents
- Indirect taxes are reduced because GST is transparent.
- As registered retailers won’t have to pay GST, there will be no hidden taxes, lowering the cost of doing business.
- As prices come down, the economy will benefit, and companies will benefit as consumption increases.
- As goods are produced and distributed, the use or consumption of services is increasing, and the reverse is also true.
- Taxation of goods and services separately, which is the current taxation system, results in greater administrative complexity and compliance costs because transaction values must be divided into goods and services values.
- GST allows manufacturing and services to share the tax burden equitably when all taxes are integrated.
- In accordance with the VAT principle, GST is only imposed at the point of consumption, not at various points (from manufacturing to retail). The development of a common national market will be aided by the removal of economic distortions.
- GST will also enhance transparency and eliminate corruption in the tax administration.
- Manufacturers pay taxes when finished products leave the factory, and retailers pay taxes when products are sold.
- A fully integrated GST platform, the GSTN, supports GST across all aspects.
GST Disadvantages
- Real estate market in India is believed to be negatively affected by GST according to some economists. Approximately 12 percent of the demand for new homes would be reduced due to the increase in cost.
- According to some experts, CGST or Central Goods and Services Tax, VAT or State Goods and Services Tax are merely new names for these taxes. The number of tax layers does not decrease significantly.
- It is currently only possible to tax some retail products by four percent. A higher GST could result in a higher cost for garments and clothes.
- It would have an adverse effect on the aviation industry. Currently, airfares are subject to a service tax between 6 and 9 percent. GST will effectively double the tax rate as it will surpass fifteen percent.
- It would take time and effort for the entire ecosystem to adapt to and migrate to the new GST system.
Read More:-
- Step By Step GST Registration Process
- How Can I Get The GST Registration Number?
- Online GSTIN Verification & GST Number Search Tool