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GST is a comprehensive indirect tax on manufacture, sale and consumption of goods and services throughout India (Except state of Jammu and Kashmir), to replace taxes levied by the central and state governments.
It is levied on both goods and services. The main aim of GST is to centralize taxation for businesses so as to relieve them of burden of compliance and better manage their cash and finances.
Important features of GST are:-
GST is a value added tax, levied at all stages of the supply chain, right from manufacture to final consumption, where credit shall be allowed for taxes paid at previous steps as set-off
GST would be applicable on the supply of goods or services, as against the present concept of tax on the manufacture and sale of goods or provision of services
GST would be a destination based consumption tax ie, tax would accrue to the taxing authority which has jurisdiction on place of consumption.
GST would apply to both goods and services barring a few exceptions.
GST would be levied concurrently by both Centre and State. GST to be levied by the Centre on intra‐State supply of goods and / or services would be called the Central GST (CGST) and that to be levied by the States would be called the State GST (SGST).
However it is contemplated that the base and other essential design features would be common between CGST and SGST, across SGSTs for the individual States.
Inter-State supplies within India would attract an Integrated GST (aggregate of CGST and the SGST of the destination State).
GST Advantages
The advantages of GST can further be explained as:
There are various definitional issues related to manufacturing, sale, service, valuation etc. arises. These needs to be rationalized.
Several transactions take the character of sales as well as services, thus there is complexity in determining the nature of transaction.
The mechanism of imposing taxes, exemptions, abatements, other benefits are different in state and centre
Existing law has resulted in significant number of issues related to interpretation or various provisions and the category of the products and the nature of services.
India needs comprehensive levy and collection on both goods and services at the same rate with the benefit of input credit
A simple tax structure can bring greater compliance, thus increasing number of tax payers and in turn tax revenues of Government.
GST will ensure boost to exports. When the cost of Production falls in the domestic market, Indian Goods and services will be more price competitive in foreign markets
It is expected that the introduction of GST will increase the tax base but lowers down the tax rates and also removes the multiple point This, will lead to higher amount of revenue to both the states and the union.
Disadvantages of GST
Small traders may not have access to internet or computers and may be left out.
GSTN or IT network for GST, can have privacy and security related issue
GSTN or IT network for GST, can be a single point of failure affecting every one across India, if any failure occurs
Local dealers have to pay CGST in addition to SGST (earlier they had to pay just VAT).
There shall be no differentiation between “goods & services” under GST model, services supply within the state would attract SGST at each stage in the supply chain ,but in the mean-time assesse have to pay CGST also.
Introduction of GST model could affect negatively (than positively) to few Industries/sectors.
Under the GST Model , the state should face heavy losses in terms of tax collection but they also get compensated on the other hand by the states. Infact some states are of the view that there should not be any time –frame for compensation scheme.
Answer:
Hailed as one of the biggest tax reforms of the country, the Goods and Services Tax (GST) subsumes many indirect taxes which were imposed by Centre and State such as excise, VAT, and service tax. It is levied on both goods and services sold in the country
GST Day celebrated on July 1st every year: Let’s look back at how GST has done past one year-“One year of GST : A Look Back”
Any reform is bound to have advantages and disadvantages. In this article, we will talk about both the advantages and disadvantages of GST:
Advantages of GST
GST eliminates the cascading effect of tax
Higher threshold for registration
Composition scheme for small businesses
Simple and easy online procedure
The number of compliances is lesser
Defined treatment for E-commerce operators
Improved efficiency of logistics
Unorganized sector is regulated under GST
Disadvantages of GST
Increased costs due to software purchase
Being GST-compliant
GST will mean an increase in operational costs
GST came into effect in the middle of the financial year
GST is an online taxation system
SMEs will have a higher tax burden
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