Top 10 Advantages and Disadvantages of GST Tax in India
The tax system is one of the major concerns of government all around the globe. Since ages, we are implementing different tax systems and techniques to run the government without a hiccup. The infrastructure of a government depends a lot on the tax system and it is not only today but running from ancient times. We came to know a lot about different ancient tax systems from various pundits of history.
India has done something new by implementing the GST tax system in India. There are some people who like the system and some who don’t like it. Here we will discuss about the advantages and disadvantages of the GST tax system but before that, we must know what GST is?
There are a lot of indirect taxes in many goods across the country, GST is the single replacement for them. The tax is divided equally between state and central government. To boost the economy of the country it is a very basic and single domain for taxation in India.
Now let’s learn about the advantages and the disadvantages of the system.
Advantages of GST:
1. Very simple system: GST which is also known as Goods and Service Tax will replace all other existing indirect tax systems in the country. There are 17 indirect laws which will have a single substitution in GST. The nation will be able to understand the system easily because of its simple nature.
2. The revenue will be lot bigger: After the implementation of GST, there will be no dodging of the taxes which people can do with the current taxation system. The simple pattern of the system will surely encourage more and more people to pay the taxes and the more people pay the taxes more the revenue is.
3. Inventory and Logistics cost a bit low: Inventory and the logistics cost will be lot low after the implementation of this tax system as I said before 17 different laws are merged into one single system cost is really going to decrease. The slowness of carrying goods will be changed as they do not have to wait for different permissions.
4. A big boost in investment: As per the previous tax system in India, the input on the capital goods is not present but after the new GST takes over, the input on the capital goods is present there. So, for that reason, we can surely say that the investment will be getting a boost of 6% as per the expectations of the government.
5. The less developed states will get a push: As per the previous tax system the state can keep 2% of the production tax which is very low if we are thinking of transformation of some poor states. But with the changing GST state government will get a heavy chunk which will help them for the development of the state.
Now, like the advantages, there are some disadvantages of the system too. We are going to discuss them below.
Disadvantages of GST:
1. Real-Estate will be impacted highly: One of the biggest cons of the GST can be seen in the Real-Estate market and the effects will be very negative. As per GST, the tax for a new home will increase to 8%, which will decrease the demand for a new home to up to 12%, so isn’t that a big blunder in the Real-Estate market.
2. Same laws with a new package: Some of the experts who are saying that the GST is just like an old wine in a newly polished bottle. They are claiming that the features of GST which are SGST, IGST, and CGST are the same as the existing tax system. So ultimately it’s just coming with a new name having same features.
3. Services will be costlier: The tax system before the implementation of GST was of 15 % and with the new GST, the tax has been increased to 18%. So many other services are effected and the costs of them are increased like airline, telecom, and banking. Some other heavily affected services are petroleum and insurance.
4. Businessmen will be affected: After the implementation of GST, the control of a business in a state is in the hands of state or central government. The businessmen are bound with law so they cant to their thing like they did before. Many businessmen in the country has already risen question over the system.
5. Credit mismatch for income tax: The tax system is changing so surely for some time people have to pay high taxes. So this is another big problem for the general citizen.
Some new doors for the development of people will surely open with this new GST tax system. Meanwhile, we can see the bonding between the state and the central government a lot better already.