Gst advantages and disadvantages in india
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Advantages of GST Bill
Introduction of a GST is very much essential in the emerging environment of the Indian economy.
There is no doubt that in production and distribution of goods, services are increasingly used or consumed and vice versa. Separate taxes for goods and services, which is the present taxation system, requires division of transaction values into value of goods and services for taxation, leading to greater complications, administration, including compliances costs. In the GST system, when all the taxes are integrated, it would make possible the taxation burden to be split equitably between manufacturing and services.GST will be levied only at the final destination of consumption based on VAT principle and not at various points (from manufacturing to retail outlets). This will help in removing economic distortions and bring about development of a common national market.It will also help to build a transparent and corruption-free tax administration. Presently, a tax is levied on when a finished product moves out from a factory, which is paid by the manufacturer, and it is again levied at the retail outlet when sold.
DISADVANTAGE
The proposal of reducing the tax exemption threshold limit from Rs. 150 lac to 25 lac will bring a large number of Small & Medium businesses under the tax scanner who were previously exempt.This will lead to additional compliance costs for a number of small – medium enterprises for registration and tax filing purposes.It would lead to an increased requirement of working capital for SMEs to discharge off the GST liability post generation of invoice.The GST levied on products & supplies will not be available as input credit for end consumers, so the cost will be carried on to them, resulting in increased prices of products.E-Commerce startups might have a reason to get worried after details have emerged of TCS (Tax collected at source) guidelines of GST. Apparently, they will be required to file quarterly and monthly returns, and collect taxes from online sales.This will increase documentation and operational costs by a certain amount, and the increased burden is expected to be passed on to the consumer.
Introduction of a GST is very much essential in the emerging environment of the Indian economy.
There is no doubt that in production and distribution of goods, services are increasingly used or consumed and vice versa. Separate taxes for goods and services, which is the present taxation system, requires division of transaction values into value of goods and services for taxation, leading to greater complications, administration, including compliances costs. In the GST system, when all the taxes are integrated, it would make possible the taxation burden to be split equitably between manufacturing and services.GST will be levied only at the final destination of consumption based on VAT principle and not at various points (from manufacturing to retail outlets). This will help in removing economic distortions and bring about development of a common national market.It will also help to build a transparent and corruption-free tax administration. Presently, a tax is levied on when a finished product moves out from a factory, which is paid by the manufacturer, and it is again levied at the retail outlet when sold.
DISADVANTAGE
The proposal of reducing the tax exemption threshold limit from Rs. 150 lac to 25 lac will bring a large number of Small & Medium businesses under the tax scanner who were previously exempt.This will lead to additional compliance costs for a number of small – medium enterprises for registration and tax filing purposes.It would lead to an increased requirement of working capital for SMEs to discharge off the GST liability post generation of invoice.The GST levied on products & supplies will not be available as input credit for end consumers, so the cost will be carried on to them, resulting in increased prices of products.E-Commerce startups might have a reason to get worried after details have emerged of TCS (Tax collected at source) guidelines of GST. Apparently, they will be required to file quarterly and monthly returns, and collect taxes from online sales.This will increase documentation and operational costs by a certain amount, and the increased burden is expected to be passed on to the consumer.
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