GST and it's Advantages, Disadvantages and Explanations

To keep in mind that the GST will rolling out from Ist July,2017 we have to be clear our idea about its advantages, disadvantages and explanation, why some product is upper position of weight machine while the other is lower.

It will be the historical reform of our tax structure after independence .The GST structure will come through a long journey and a massive discussion. Continuous research and analyzed its effect, it has come that it is the right time for Indian tax structure to implement GST.

GST was first adopted by France in 1954 to replace turn over taxes. Currently, more than 150 countries around the globe implemented GST. In India it was first come in the discussion in 2000, when Atal Bihari Vajpayee bought the issue. Then it was discussed in the report of Kelkar task force in2003.The empowered committee finalized views over GST &submitted report in 2008 titled “A model and roadmap for Good and service tax in India. Ultimately the GST bill (122 amendment bill in the constitution) passed in the Loksabha on April 2016.

But in current position we are eager to know the advantages and disadvantages of GST, which we have to be faced from Ist July, so the advantages are-

Ø  There will be a great relaxation of removable of cascading of tax which is known as VAT and within the state it is levied by state Govt.

Ø  GST will bring transparency on our tax structure. So we will expect improved competitiveness in the market.

Ø  It will expect that the cost of collection of tax revenue of the Govt decreased.

Ø  Uniformity  of tax rates in all over the country may be the steps of “ one India happy India”

Ø  It will expect that the ultimate tax burden on most commonly used commodities will come down, which will benefit the general consumer.

Ø  Transparency in tax rate & structured tax system will increase our export also.

Ø  On line purchased now may be easy due to wipe out local tax cost from the state border.

Ø  Agriculture, petroleum, liquor for human consumption are exempt from GST.

Ø  More over a number of food items have been exempted from any tax slabs.

Ø  Interstate sale & purchased will now be profitable.

Though there are lots of advantages some disadvantages also appear from GST. Govt mentioned four broad slabs under GST. That is 5%, 12%, 18% & 28%.Some item like gold & rough diamonds have exclusive tax rate also.

Initially price will be hike for some product, though Govt is continuously trying to levy lower tax rate for those product which is used by common people. Let’s take an example, why price will rise initially.

·         To encourage local product state govt now levied lower tax rate or nil tax rate as a VAT. In India state govt are primarily responsible for collection of entertainment taxes. However, the union govt can also collect these taxes on the type of taxation. Such as west Bengal govt levied 2% tax for Bengali films &30% tax on other films. But when GST will be applicable the cost of regional film may be increased while the cost of other film may be decreased. In the same way local small business may be faced some price hike through GST.

But keep in mind the canon of equality in taxation, which explain that in absolute term the richer should pay more taxes, Govt takes some major steps.

ü  Exemption of tax will be increased from Rs10 lakes to Rs20 lakes for small business.

ü  Tax on non Ac restaurants will decrease while the tax on five star restaurants will increase.

ü  Tax on economy class air ticket will decrease while tax on business class air ticket may be increased.

ü  Tax on cloths up to Rs. 1000 may be the same while tax on branded cloths may be increased.

·         Stamp duty will not fall under GST regime & will continue to be imposed by states.

·         To upgrade GST system some major software may be purchased.

Though we may face lots of confusion initially but ultimately GST will strengthen national integration & help consumers, trader& national market in the long run.