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What are the good sides and the bad sides of GST (Goods and Services tax)?

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What are the good sides and the bad sides of GST (Goods and Services tax)?
posted Dec 14, 2017 by Reshmi S

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GST bill covers the Goods and Services Tax and shall be the biggest indirect tax reform providing a uniform and simplified way of Indirect taxation in India. It has replaced a number of other taxes like VAT,CST,Service tax,CAD,SAD, Excise,Entry tax,purchase tax etc. GST or Goods and Services Tax - A new law,a new tax that has brought with it new challenges to face.

The basic idea for introducing GST is to convert India into a single market.This might have a positive impact on GDP of India and help to boost the Indian economy.

Dual system of GST includes :

  • SGST or State GST - collected by State Government.
  • CGST or Central GST - collected by Central Government.
  • IGST or Integrated GST - collected by Central Government.

Positive Impact of GST :

  • A unified tax system removing a bundle of indirect taxes.
  • Remove the cascading effect of taxes.
  • Manufacturing costs tend to be reduced,hence prices of consumer goods likely to come down.
  • Due to reduced costs some products like cars,FMCG etc.will become cheaper.
  • A unified tax regime will lead to less corruption which will indirectly affect the common man.
  • But,this is possible only if the benefit is actually passed on to the consumers.

Negative Impact of GST :

  • Services will become expensive.e.g.Telecom,banking,airline etc.
  • Being a new tax,it will take some time for the people to understand its implications.
  • It is easier said than done.There are always some complications attached. It is a consumption based tax,so in case of services the place where service is provided needs to be determined.
  • If actual benefit is not passed to consumer and seller increases his profit margin,the prices of goods can also see a rising trend.

However,GST is a long term strategy and the positive impact shall be seen in the long run only.

answer Dec 15, 2017 by Shamita