Introduction of GST is considered to be a significant step in the reform of indirect taxation in India. Amalgamating several Central and State taxes into a single tax would help mitigate the double taxation, leading to a common national market. From the consumer’s point of view, the advantage is in terms of a reduction in the overall tax burden on goods, which was estimated at 25%-30%. (Source: Wikipedia)
The other importance include:
- Reduction in prices: Manufacturers or traders would not have to include taxes as a part of their cost of production, which would lead to reduction in prices.
- Lower compliance and procedural cost: There would be reduction in the load to maintain compliance. Also keeping record of CGST, SGST and IGST separately would not be required.
- Move towards a Unified GST: Although India is adopting dual GST, it is still a good move towards a Unified GST which is regarded as the best method of Indirect Taxes.
- GST rollout can help boost India’s GDP growth by 100-200 bps or (1 to 2%) as this will help faster and cheaper movement of goods across the country with a uniform taxation structure.
- GST’s successful implementation would give a strong signal to the foreign investors about India’s ability to support business.
- GST will be beneficial with more transparency, efficient compliance, ramp up in GDP growth to the Centre, states, industrialists, manufacturers, the common man and the country at large.
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
Some of the Hits of GST:
- GST Council plays principled diplomacy & and thestatesmanship shown by the members is surely a hit!
2. Technological Support to the Structure of GST law: The new GST system runs under a canopy of strong technological support and we can expect more GST services to be digitalised in the months to come.
3. GST -A boon to Micro, Small & Medium Enterprises: MSMEs are now less dependant on tax experts when compared to the earlier regime, due to a simplified return filing system in place. Rationalisation of the composition scheme and introduction of quarterly filing option for taxpayers having turnover below Rs 1.5 crores was a wise decision.
Few Misses of GST: Need of recovery:
- Delayed IGST refund has hit Exporters and caused a slowdown: Although efforts are being made by the department towards timely sanctioning of refund, yet over a few months, we can expect a slowdown in the Export sector in India.
2. Sentiments around claiming of Input Tax Credit: admission of ITC is currently being allowed on a provisional basis to the recipient of the credit. Authorities are in process of reconciliation between Different GST returns and hence, many taxpayers are receiving mismatch notices for ITC claimed as per GSTR-3B and allowed as per GSTR-2A supplier data. Development of recon. tools on the GST portal will help a buyer be cautioned before claiming any wrong ITC, thus avoiding the interest or penalties that follow.
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