Business

Pros and cons of GST

GST is undoubtedly the largest tax reform our country has had. While we know the maths behind it how effective it has really been and what’s good and not so good about it? Let’s find out:

Advantages of GST:

  • Standardization of Tax across the country:

The current system of taxation in India is based on the principle of destination-based sales tax (VAT). This means that when you purchase goods or services in one state, it is taxed by that state. But under GST, there will be only one tax rate for all items across the country. This will make it easier for businesses as well as consumers to understand their expenses better and plan accordingly. Hence the next time you are out buying a laptop you won’t need to worry about the gst rate on laptop and which state to buy it in because of the standardization.

  • Elimination of cascading effect:

Under GST, there will be no cascading effect of taxes because every transaction will only have one tax levied on it instead of multiple taxes as is currently being done under different indirect taxes levied by states and Union Territories (UTs). This will simplify taxation and make it easier for both business and government to conduct business transactions smoothly without facing any problems due to multiple levies on the same product or service sold to consumers or business buyers alike. filmefy

  • Reduction in tax evasion:

GST will reduce tax evasion as there would be no scope for under-reporting of sales or overstating purchases by businesses. This will increase compliance with the tax laws by businesses and thus provide better revenue collection for governments at both central and state levels

  • Ease of Compliance:

Businesses will have to register themselves with GST Network (GSTN). Once registered, they can easily file their returns online using the GST return form. Check out this page for more info.This would also reduce the compliance cost for businesses as they don’t have to maintain separate books of accounts for each state. There would be one single database maintained by GSTN which would help in maintaining uniformity across states

Disadvantages of GST:

  • A dominating center

The GST Council has been given powers to make laws on taxes, rates and other aspects related to GST. This means that the Centre can impose its will on the states. The Constitution clearly states that states must have an equal say in matters related to taxation. However, with the present structure of the GST Council, no state can oppose any decision taken by the Centre.

  • Some States will suffer losses:

Some states like Kerala and Tamil Nadu have said that they will suffer losses under GST because they have high consumption taxes on alcohol and tobacco products which will be removed once GST comes into force while others like Gujarat will benefit due to its low tax base in these sectors which means fewer taxes collected on them before GST is implemented. This has led to protests from opposition parties in these states who say this is an unfair move by the government which could lead to unrest among citizens of these states who may not see any benefits from it initiallythedocweb

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