GST Advantages And Disadvantages
In today’s article, we will know how GST has brought a change in business and life of people in India as well as how the government has brought it in profit and loss.
What is GST?
- What is Goods and Services Tax (GST) ?
- How would you define it, and how does it work?
Actually Goods and Services Tax is a new tax system brought by the Government of India.
The Goods and Services Tax Act was passed in Parliament on 29 March 2017, and came into force on 1 July 2017. It is a comprehensive and multi-level tax, and after its existence, the rest of the taxes have undergone a lot of changes.
Simply put, Goods and Services Tax is a tax levied on the supply of goods and services. It is a tax that is levied on each addition to the value. Let us understand this more deeply, any object goes through many stages from manufacturing to use.
The first stage is the acquisition of raw materials, the second stage is production, the third stage is the storage of materials, after that the product reaches the retailer and in the last stage the final product is sold to the consumer. Goods and Services Tax is a multi-level tax which will be levied in all these phases. GST Advantages And Disadvantages
|The value of that product keeps on increasing after each stage of manufacturing, as|
If the manufacturer wants to make a shoe, first he will buy the leather, then give it the shape of the shoe, then it will be laced, then the brand will be labeled; Thus the value increases with every step i.e. when the leather gets the shoe size its value increases and the brand labeling increases the value further.
In this manner value is added at each stage i.e. all transactions during the entire manufacturing chain will be taxed. Although earlier the situation was that the center used to levy excise duty on manufacturing and when the product was sold the state added VAT and a VAT was levied at the next level of sales as well, but now this new tax is levied at every level of sales.
Types of Goods and Service Tax
Goods and Services Tax has an important contribution in changing the current tax structure and economy. Indian tax structure is of two types – direct and indirect. Direct means in which the liability cannot be passed on to someone else, Indirect tax means the liability can also be given to any other person. When the Goods and Services Tax came into force, it was of three types – GST Advantages And Disadvantages
- CGST Where the revenue was collected by the Centre.
- SGST Where the state government collects the revenue.
- IGST Where revenue is collected by the Center for inter-state sales.
How the Goods and Services Tax works
Example – A trader in Uttar Pradesh sells goods to a consumer for ₹ 10000, the rate of Goods and Services Tax is 18%, in which CGST is levied. 9% and SGST Contains 9%. In this case the dealer will deposit Rs 1800 (₹900 will go to the center and ₹900 will go to the state government) hence IGST will be charged as ₹800; Now CGST And there will be no need to pay SGST. Let us see what are the effects of Goods and Services Tax (GST) in our society, ie what are the advantages, what are the disadvantages? GST Advantages And Disadvantages
- Affects tax cascading
The cascading tax effect can be described as ‘tax on tax’. Importantly, it will eliminate the cascading effect of tax which was evident earlier. GST Advantages And Disadvantages
- Upper limit of registration
In the VAT structure, other businesses with a turnover of more than 500000 were required to pay VAT, however with the new Goods and Services Tax this limit has been increased to 200000, which is beneficial for many small traders.
- Structure plan
Do It Using the Tax Structure Plan This means that the tax and compliance burden on small businesses has been reduced under the Goods and Services Tax. GST Advantages And Disadvantages
- Easy online process
The entire process of Goods and Services Tax system has been made online, so that it is easy for the user and he does not get entangled in unnecessary extraneous trips. GST Advantages And Disadvantages
- Regular business
Before this new tax, many industries were largely unregulated and unorganized. There has been regularity in industries under the Goods and Services Tax.
- Cost overruns
For efficient use of new billing software, software procurement and staff training: lead to cost escalation. GST Advantages And Disadvantages
- Goods and Services Tax Compliance
Small and medium-sized enterprises need to understand the nuances of the Goods and Services Tax regime. Maintenance of digital records should be consistent, if Goods and Services Tax complaint challan is issued then it should contain mandatory details like place of supply, HSN. code etc. GST Advantages And Disadvantages
- Increase in operating cost
goods and services Tax Changing payment methods. Businesses no longer have to employ complaining to tax professionals. Since hiring specialists will incur additional costs, this will increase costs for small businesses. GST Advantages And Disadvantages
- Problem with online application
Since the Goods and Services Tax is an online taxation system, filing details can be difficult for some small businesses. In addition, small businesses, especially, will face difficulties, as earlier only businesses above Rs 1.5 crore had to pay excise duty, but now businesses with more than ₹ 200000 have to pay Goods and Services Tax. Will have to do Though one can choose the structure plan but that too will be a tedious and lengthy process.