Disadvantages of GST Tax
Would impact the Real-State Market – GST Tax would swell negative remarks on the real-estate as perceived, GST will increase the cost of the new homes by 8% which in turn will cease the demand by 12%.
Old Wine in a New Bottle – According to the experts, terms such as GST which includes CGST, SGST, and IGST is nothing but just a new name in accordance with the existing tax systems. Kind of old wine in a new bottle.
Costlier Service – The current Service Tax stands at 15% as of now which will increase to 18%-20% when GST is levied. As such many services will be on the costlier side with telecom, airline and banking affected majorly. In fact, insurance and petroleum are also said to be majorly affected by the enactment of GST Tax.
Complexity for the Businessmen – According to the proposal of the GST Tax, the control on business will be rendered to Central and State Governments with businessmen binding by-laws. As such complexity may arise for many businessmen across the nation.
Income Tax Credit Mismatch – As the change in tax guard will take place, the first few instances of application would mean high tax paying at the start. That said, they will only be able to exercise the tax input on the latter stages when the loop is exercised. With that in place, there would be ITC mismatch during the early uses of GST Tax.
Disability Tax – Opposition has called it as a Disability Tax as many of the things related to disabled people which were earlier Tax-Free are now included in GST Taxation. Prior to implementation of GST, brail paper, typewriter, hearing aid and motorized wheelchair were tax-free whereas these things are being taxed now. Opposition have made pleas to roll back the tax on such items
Expensive Banking and Insurance – On one end, Modi government is trying to give a push to banking services and insurance in India and on another side of the picture, the government has decided to tax banking and insurance service at higher rates when compared to the previous rates
Impact on Discounts – GST has also had an impact on discount and reward programs as well. The product is being taxed on the rates pre-discount whereas the products were earlier taxed at post discount prices. Most of the companies have also suspended reward programs for temporary basis because of complexities of GST
Mid-Year Launch – Government has chosen a mid-year launch for GST and this will lead to problems in taxation and reporting during theend of the financial year. Ideally, the government should have launched GST at end of financial year as this would have avoided a lot of confusion during taxation and reporting.
Registration in the Many States Required–As per GST, the seller would require registering in all the states that it does business in and that would increase the complexity for the seller. The government should have created a provision for centralized registration of State GST as this would have helped many sellers during the roll out.