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Taxes have been implemented in the society by the human civilization for ages. A number of studies have been conducted regarding the development of taxation in the society since the ancient times. Taxation is beneficial as it is the only way through which the government can provide the basic infrastructure and prosperity to its citizens. The latest development in this regard is the introduction of GST in India. GST is a short acronym for Goods and Services Tax. The GST has been implemented by the government in India. In the present article, an attempt has been made to examine the advantages and disadvantages that are associated with GST.
Before proceeding with the pros and cons of GST, it is important to briefly discuss what GST is. GST can be described as the replacement of all the indirect taxes that are being currently levied by the government on goods and services across the country. In this way, basically GST can be described as direct taxation that will provide a single domain of tax. That is to be levied at the national level. GST is consolidated on the basis of a uniform rate of tax and it has to be paid at the end of the final destination or at the point of consumption. GST will reform the current taxation regime and it will provide for a coalition between the Central and the State Government. GST will provide a basic cooperated linkup among the Indian markets that is expected to provide a boost to the economy.
Let us proceed with the advantages and disadvantages that can be expected by the implementation of GST in India. Among the advantages of GST, the following need to be mentioned:-
1. Simplicity: The existing form of indirect taxes will be replaced by the Goods and Services Tax in the country. GST will provide a substitute for the 17 indirect taxes that are applicable in the nation and will subsidize it with the new GST.
2. Simple Compliance: A widespread IT system will provide the basis for the GST administration in India. As a result, all the taxpayer services like registrations, payments, returns etc. will be available online and as a result, compliance will become simple and apparent.
3. Uniformity of tax rates: The introduction of GST will help in making sure that common traits of indirect taxes and structures are applicable throughout the nation, which will increase certainty and also the simplicity of doing business in the country. In other words, it can be said that GST will help in doing business in country tax neutral, regardless of the choice of place where the business is being done.
4. Elimination of cascading: GST will also help in ensuring minimal cascading of taxes, as it will provide a scheme of flawless tax credits across the value sequence and cross the boundaries of different states of India. This will help in reducing the hidden costs that are associated with doing trade.
5. Improving competitiveness: When there is a decrease in operation expenditure of doing business, eventually it will also result in enhanced competitiveness for trade. It is also believed by the World Bank that implementing the Goods and Services Tax (GST) along with measures like dismantling the interstate check posts, will be the most important reforms that will help in improving competitiveness in the manufacturing sector of India.