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Thursday 1 September 2016

GST: Advantages and Disadvantages


The goods and service tax or GST is a taxation system where there is a single tax in the economy for goods and services. The GST is basically an indirect tax that brings most of the taxes imposed on most goods and services, on manufacture, sales and consumption of goods and services under a single domain at the national level. In the present system taxes are levied separately on goods and services. The GST is a consolidated tax based on a uniform rate of tax fixed for both goods and services and it is payable at the final point of consumption. At each stage of sale and purchase in the supply chain, this tax is collected on value added goods and services, through a tax credit mechanism. Introduction of GST is very much essential in the emerging environment of the Indian economy and it has many advantages. In the GST system, when all the taxes are integrated it would make possible the taxation burden to be split equitably between manufacturing and services. It will also help to build a transparent and corruption free tax administration. GST can also help to diversification of income sources for government other than income tax and petroleum tax. Biggest benefit will be that multiple taxes like octroi, central sales tax, state sales tax, entry tax, license fees, turnover tax etc will no longer be present and all that will be brought under the GST. There are also some disadvantages for this system. Critics say that GST would impact negatively on the real estate market. It would add up to 8 percent to the cost of new homes and reduce demand by about 12 percent. Some economist says that CGST, SGST and IGST are nothing but new names for central excise/service tax, VAT and CST and hence GST brings nothing new for which we should cheer. According to the 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. The GST rate is expected to be around 14-16 percent. After the combined GST rate is fixed, the state and the centre will decide on the SGST and CGST rates. At present 10 percent is levied on services and the indirect taxes on most goods is around 20 percent. Works Cited: www.mapsofindia.com www.googleweblight.com : “Advantages and Disadvantages of GST”

1 comment:

  1. It depends on the tax structure and the type of goods a common man use/consume. As per the latest proposed GST tax structure , most the essential commodities will have either zero or 5% tax slab rate. But let’s wait for few more months to have complete idea on this!



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