GST WITH ITS BENEFITS AND NEGATIVE EFFECTS

What is GST in India?

GST is the system which is proposed and merging of all existing Taxes into a single system i.e.GST(goods and service tax.It is the single tax on goods from manufacturer to consumer.GST is particularly designed to replace the indirect taxes imposed on goods and services by the Centre and States.

GST is one indirect tax for the whole nation, which will

make India one unified common market. 

These are the taxes that could be absorbed into the GST regime:

Central Sales Tax

State VAT

Entry Tax

Purchase Tax

Entertainment Tax (not levied by local bodies)

Luxury Tax

Taxes on advertisements

State cesses and surcharges

Taxes on lotteries, betting and gambling

one of the main benefits that the new GST regime promises are a reduction of multiple taxes. 

Benefit of GST for the Centre and the States

According to experts, by implementing the GST, India will gain $15 billion a year. This is because, it will promote more exports, create more employment opportunities and boost growth. It will divide the burden of tax between manufacturing and services.

Benefit of GST for individuals and companies

In the GST system, taxes for both Centre and State will be collected at the point of sale. Both will be charged on the manufacturing cost. Individuals will be benefited by this as prices are likely to come down and lower prices mean more consumption, and more consumption means more production, thereby helping in the growth of the companies.

Saving more Money

For a common man, GST applicability means the elimination of double charging in the system. This will reduce the price of goods and services & help common man for saving more money.

It is expected that price of FMCG products, small cars, cinema tickets, electrical wires etc is expected to reduce.

Easy Tax Filing and Documentation   

For a businessman, GST will be a boon. No multiple taxes means compliance and documentation will be easy. Return filing, tax payment, and refund process will easy and hassle free.

Increase in GDP

As demand will grow naturally production will grow and hence it will increase gross domestic product. It is estimated that GDP will grow by 1-2% due to GST.

Increase in Revenue

GST will replace all 17 indirect taxes with single tax. Increase in product demand will ultimately increase tax revenue for state and central government.

Goods and service tax is a boon for the Indian economy and the common man. It is a welcome step taken by the government.

Negative Impact of GST :

• Services will become expensive.e.g.Telecom,banking,airline etc.
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• Being a new tax , it will take some time for the people to understand its implications.
• It is easier said than done.There are always some complications attached. It is a consumption based tax,so in case of services the place where service is provided needs to be determined.
• If actual benefit is not passed to consumer and seller increases his profit margin ,the prices of goods can also see a rising trend.
• Higher tax burden for manufacturing SMEs 
• Increase in operating costs
• Change in business software
• GST will be implemented during the middle of the year
• Increase in taxes will increase prices
• Petroleum products are not part of GST yet
• Composition scheme is not available for many businesses