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The Indian government introduced GST on 1st July 2017, also known as Goods and Services Tax, with the objective of lowering the multiplicity of indirect taxes such as VAT, service tax, and so on, as well as unifying the Indian market. It is applicable to each product and service sold in the nation. The adoption of GST had a distinct impact on each industry. Few individuals were in favour of it, on the other hand, few were against it.

Although GST is a significant tax reform in India, it also has several drawbacks. To understand it, let's take a look at the advantages and disadvantages of GST in this article.

Advantages of GST in India

Here are the several benefits of GST that you must know.

 

  • GST has consolidated a slew of indirect taxes into a single tax. As a result, taxation of various services and products has become easier.

  • It has eliminated the tax cascading effect.

  • Companies that have a revenue of less than Rs. 20 Lakhs are exempted from paying GST.

  • Small firms (with a turnover of Rs. 20 to Rs. 75 Lakhs) can profit from GST since it allows them to use the composition plan to cut their taxes.

  • One of the most substantial benefits of GST is that it has lessened the tax and regulatory costs of various small businesses.

  • By mandating payments and compliances to be made online, GST has introduced transparency and regulation to unorganized sectors such as the textile and construction industries.

  • GST has decreased taxes on a few products by 2%, including smartphones and automobiles.

  • GST exempts small businesses from paying excise duty, service tax, and VAT.

  • From GST registration to submitting GST returns, the GST procedure can be completed online without visiting any office. As a result, it will save your time.

  • One of the key advantages of GST in India is that it has boosted logistics efficiency by cutting excessive logistical expenditures such as border tax.

  • The GST is assisting in the promotion of tax transparency. It has also contributed to beneficial adjustments by providing greater clarity and organizing the system.

Now that you have known about the multiple pros of GST, let’s talk about its disadvantages.

Disadvantages of GST in India

Following are the disadvantages of GST:

 

  • With the introduction of GST, companies are now mandated to update their accounts with the expensive GST-compliant software, which has increased the cost of operations.

  • It has escalated the administrative burdens. Every firm in the state of operation is obligated to register on the GST portal. However, small businesses which are being operated in small-town or cities that are not technologically adept will have to face compliance challenges for businesses.

  • If any firm fails to register itself at the GST site, the company will have to pay hefty penalties.

  • Previously, only companies with a revenue of more than Rs 1.5 Crores had to pay excise duty. But now, any firm having a turnover of more than Rs. 20 Lakhs is obligated to pay GST.

  • The cost of GST service fees in the banking industry has increased from 15% to 18%.

  • Increased insurance rates are also one of the major disadvantages of GST in India.

The GST has abolished all indirect taxes charged by the Indian Central and State governments on goods and services. GST has had a tremendous impact on the economy, influencing a variety of industries in different ways. Depending on the sector you work in, GST has both benefits and drawbacks. The government's only aim for implementing this was to promote transparency and simplify the taxation process.