What is GST?: Almost for once in 2017, the whole nation went like what is GST? Nobody was initially clear about what this new term meant and what it did ought to change in our lives. GST stands for Goods and Service Tax. Recently in 2017, the government of India chose to replace 15 different indirect taxes like service tax, value-added tax and excise tax by one major tax and that is the so-called GST. Basically, GST is designed in such a way that it is multi-leveled and destination based. Let’s make it a little simpler for your explanation. First of all, Goods and Service tax will be implemented at every stage whenever and wherever there will be a value addition to the product, be it in terms of items or label of a brand name. That makes GST multi-leveled. For destination based, GST provides the whole tax generated income to the destination where the product was supplied. For example, if a Delhi based merchant supplies computer parts in Bangalore, then the revenue generated from GST will go to Bangalore, not Delhi.
GST was a drastic change in the country’s economy and tax collection when it was officially started on 1st July 2017. Like there are always two sides to a coin, the GST reform also brings along its pros and cons. Applying such a big reform to a country’s economy was no easy but since the government wanted a change, it is now a part of our country. We are going to take both the advantages and disadvantages of GST one by one. Let’s begin with the positive benefits of GST:
Advantage of GST
1. One tax for all, no tax on tax
Like we read above, GST has replaced a number of indirect taxes levied on various services. Earlier, the process of payment of taxes was quite complicated and there was a system of tax on tax paid items. Now, we do not need to pay multiple taxes and instead only have to pay for one tax and that is GST. People are not required to pay tax on tax now.
2. GST: Transparent and no fraud
With the upcoming of GST, there is more transparency for the customers. Shopkeepers and retailers cannot add any hidden taxes to our bills and thus, can not charge us unnecessary money. It is foreseen and predicted by experts that GST will definitely help in building a transparent and corruption-free tax administration.
3. It comes with an easy online procedure
GST has removed the need for the filing of various taxes now and then. Not only does it cut the need to roam here and there for registration and filing returns but also the software is really simple to use for a common man. The whole procedure has to be done online.
4. Complication free inter-state movement of goods
Another big advantage of GST that is has eased the inter-state movement of goods. Earlier, it used to be a complicated process. Whenever a vendor had to deliver goods from one state to another, they had to get a VAT declaration along with them otherwise, there was a high probability that their goods might be seized on checking. Since now, there is only one tax to be paid everywhere, these complications no longer can affect the interstate movement of goods.
5. Higher threshold for tax payment
Before GST, all the businesses were liable to pay tax(VAT) if they had a turnover of more than Rs. 5,00,000. For service tax, the same criteria were applied over 10 lakh rupees. These limits were set differently for different states and areas in India. Under GST administration, in any case, this limit has been expanded to Rs 20 lakh, which exempts numerous little merchants, specialist organizations, and service providers.
6. Reduced logistics costs
Prior to GST, the industries had to build multiple logistic warehouses in different states of the country, where their goods were supplied to avoid paying state taxes again and again. With GST, now the logistic industries do not need to set up their warehouses everywhere. Lessening in pointless logistics costs are as of now expanding benefits for organizations associated with the supply of merchandise through transportation.
Apart from these advantages, the arrival of GST brought along some disadvantages too.
1. Changing the whole offline system to online
From registration to filing returns and payment everything now needs to be switched online. People are not yet familiar with this. Thus, they will need GST experts and compliances to fill returns till they themselves get familiar with the process. All businesses no matter how small need to be consistent with computerized record-keeping, and obviously, document auspicious returns.
2. Hike in prices of Aviation industry
A big disadvantage with GST is that it will severely affect the aviation industry. GST has lead to hike in the airfare due to the increase in service tax. Service taxes on airfares currently lie in the range of six to nine percent. It is foreseen that these prices can shoot up to fifteen percent and consequently, double the tax rate.
3. Inflation on items of basic necessity
The common man is the most affected out of GST. Clothes and items of basic use and necessity will become expensive. Gas cylinders, traveling, school fees, education and banking facilities are some of the things whose prices have really shot up.
4. Change in Business Software during the mid of the year
As this tax reform has been implemented in the middle of the year 2017, there will be a ton of changes to be performed. Everything from the software system to tax structure and will result in complication and chaos. As change is not easy thus, managing to re-do everything in a fully new structure can take time.
5. Effect on real estate
Some Economists say that GST in India would badly affect and change the prices in the real estate market. It would add up to 8 percent to the cost of new homes and reduce demand by about 12 percent.
Question: What is full form of GST?.
Answer: Full form of GST is Goods and Service Tax.
Question: What is date of implementation of GST?
Answer: Date of Implementation of GST is 01 July 2017.
Question: How many Taxes merged with GST?
Answer: There are 20 types of taxes merged with GST.