Positive vs. Negative Aspects of GST
As with every new policy, the Goods and Services Tax is bound to have upsides and downsides. Let’s take a look at what they are:
- GST aims to create a common market for all the various states in India, unifying the country. The goal is to improve tax compliance.
- GST is a simplified and cost-efficient system, compared to the old one. Only three types of taxes will have to be maintained: CGST, SGST and IGST.
- GST will lead to a more transparent way of increasing the revenue.
- A system of Input Tax Credit is available, which will reduce prices.
- GST is abolishing the cascading effect on tax. Simply put, this means that a tax is levied on the same product several times, and by the time it reaches the customer, the product has a very high price that customers pay for.
- GST is a long-term strategy to have a higher output, which will lead to more job opportunities, higher buying power, and ultimately — an economic boom.
- With GST the calculation of Revenue Neutral Rate (RNR) will be very difficult to do.
- Some of the taxes on goods and services will increase, compared to the previous system, which might lead to setbacks and negative effects on manufacturers and vendors.
- Under the old system, certain goods were taxed only until a certain stage. The new GST system will levy tax on all stages.
- The new GST system is being referred to as a single taxation system, but it is in fact a dual one. That is because the central government and the states both collect separate taxes on every transaction.
- GST is said to revolutionize India’s economic system. However, the economy is complicated, and a different taxation structure might not be the simple solution that it’s made out to be.
There are two sides to every story. In this case, it’s visible that the benefits outweigh the negatives, and it was all done in order to have a better, more transparent, India.