Learn and Understand, What are Advantages and Disadvantages of GST?
Implementation of Goods and Services Tax (GST) was one of the long-awaited fiscal reform and due to various reasons it was only hanging around and could not circumvent the obstacles for the substantially long period of time so much so that people started saying that the reform may not see a light of the day. At this juncture, we need to understand that GST could eventually become a reality only because of the various advantages it brought along. Of course, no reform can be full proof and so is GST and therefore the implementation of GST had its own disadvantages with few being inherent and intrinsic to the idea of GST, few due to the structure in which it is brought and a lot is due to the manner in which it is implemented which could have been largely avoided. Also learn, Benefits of GST, What are Advantages and Disadvantages of GST?
While we take a stock of GST as of today, we need to acknowledge the efforts taken by the government in making it much simpler from the time first model GST code was released in June 2016 to today when we are at the brisk of 200 days post its implementation. While we take a deeper dive into understanding the advantages and disadvantages of GST, we need to appreciate the fact that this being a transactional tax its advantages and disadvantages cannot be equated for all. For instance, it is possible that one sector or industry is largely benefitted due to the implementation of GST while other sector or industry has taken the exact opposite position. The point that we need to take home is that many advantages and disadvantages of GST can be closely understood only when its impact is measured industry or sector wise.
The list of advantages and disadvantages of GST can be very long, but herein we look at some of the major ones as explained below:
The Advantages of GST (Goods and Services Tax):
- Boosts Foreign Investment and improves the overall investment climate.
- Single assessing authority.
- Increased certainty/ Reduced litigation.
- Erosion of parallel economy.
- Reduced corruption.
- Downslide of prices.
- Common national market throughout the country, and.
- Increase in employment opportunities.
The Disadvantages of GST (Goods and Services Tax):
- Not a one nation one tax in spirit.
- Multiple Tax rates.
- GST Portal issues.
- Hurried implementation of the Law.
- Working capital blockage.
- High compliance burden.
- Elimination of local tax incentives/ schemes, and.
- Disconnect from Foreign Trade Policy.