Advantages and Disadvantages of GST/Indirect Tax.

Advantages of GST:

a)     One Nation One Tax:

There will be one nation one tax concept. Rate of tax is the same throughout the country In Case Of sales Tax, Rate of Tax is low in the state of Gujarat as compared with the state of Maharashtra on motor cars. Customers in Maharashtra use to buy the car from Gujarat than from Maharashtra.

b)     No Cascading Effect:

There will be no cascading effect of GST paid on Input Tax paid. The credit of input on goods, input on services, capital goods will be available to assesse. For Examples: Traders of mobiles purchase mobiles for Rs.5000 He pays GST @ 18 % i.e. Rs.900. He sells the same at Rs.6000 Plus GST Rs.1,080. He pays GST of Rs.180 (1080 -900 = Rs.180) [Output-Input =Credit].

c)      Easier Tax compliance:

Earlier Businessmen faced various authorities. For Excise duty –Excise Authorities, for services Tax – Services Tax authorities, Sales Tax – sales Tax Authority Under GST One tax, one authority.

d)     No check post on state Borders:

State Governments has set up a barrier for Verification of movements of goods Comings Into the state. Under the GST era, such Check Posts at state borders are dismantled. There is a seamless flow of goods from one state to another. The entire country has become one market.

e)     Lowers transportation Cost and Reduction of time in movements of goods:

 In the sales Tax era, a lot of time was wasted at check posts, octroi naka, etc. In GST Check Posts, octroi nakas are dismantled resulting in a reduction of time and cost of transportation.

f)      Buoyancy to the government's Revenue:

 GST is expected to bring buoyancy to the government revenue by widening the tax base and improving taxpayers’ compliance. It was reported about Rs.one lakh crore per month.

 Disadvantages of GST

(a)   Lose autonomy:

The major disadvantages will be that the state will lose some autonomy as the rate is fixed throughout India, states cannot get more revenue by changing rate from 12.50 % to 13.50%. 

(b)   IT Infrastructure:

GST compliances are IT-Based. The slowdown of the IT System creates Difficulties for filling GST returns and GST payments. 

(c)    Implementations Issues:

Difficulties in implementing some of the provisions of the mechanism of the reverse charge (RCM) for small and medium dealers.

(d)   Frequent charges:

Frequents charges in GST law and rules create large confusion.

(e)   Various rate of Tax:

GST laws have given various rates such as Nil 0%, 5%, 18%, 28% Cess, etc. this leads to disputes in classification and rates. This leads to unnecessary litigation.