Our nation recently met the biggest economic reform of modern times – GST. Goods and Services Tax has taken India buy a storm. Though the Government did meet some opposition, they have been able to successfully implement it in July and we have been able to start paying tax already. From eating out to shopping, all the bills handed over to us are now taxed through GST. But is it all good? According to https://gpalabs.com/ , GST has both pros and cons, noting these will allow you to produce better academic papers and essays on finance and current affairs.
- Pros of GST:
1. Makes the tax system more transparent
Implementation of GST is going to make the whole taxation system a lot more transparent. With the implementation of a single tax system it is difficult for people to evade tax. Previously each state had their own set of rates. Now since the whole nation is under one fixed rate, it is impossible for them to evade it.
2. One nation one tax
The whole concept of one nation, one tax has been under the purview for a long time now. With GST coming into force, the whole process of taxation is becoming easier to understand and implement.
3. Reduces taxation
In many cases the amount of tax levied on goods have substantially decreased. For a developing country like ours, this is great for the economy.
4. Improves competitiveness in any industry
Since the whole process is becoming more transparent and simpler, the competitiveness in each industry is increasing. There is very little space for certain businesses to dominate over others in any given industry.
5. Higher revenue effectiveness
The cost for computing and collecting tax has decreased in terms of the Government’s role in taxation. This makes the whole system of collecting taxes much more cost effective when compared to the previous system. This helps to improve the revenue effectiveness from our nation’s taxation system.
- Cons of GST:
1. Service tends to be more expensive
The rate of GST levied on services have increased, thus causing the cost of services to substantially increase. This increase in cost of services will have a negative effect in some industries, as the costs will spike up.
2. Initial accounting problems
There will be some initial problems of changing over.
3. Loss for manufacturing concerns
States that are solely dependent on manufacturing are going to lose out. They will be collecting much less tax than before.
4. Negative impact on retail market
It is predicted that GST will have a very negative effect on the retails market of our nation. This will mainly effect the small retailers and producers.
5. Initial inflation
Though in the long run it will cut down on inflation, GST will cause an initial inflation. The cost of some goods and services will initially go up.
This should give you a good idea regarding the impact of GST on our nation. We are yet to see whether the promised positive effect will ride over the immediate negative effects soon. But on the whole it seems like this is definitely going to be beneficial for our economy in the long run.