Regarded as one of the biggest tax reforms of the country, GST incorporated several indirect taxes which were enforced by Centre & State such as VAT, excise, and service tax. It’s imposed on both goods & services sold in the country.
Any reform has bound to have pros & cons. Here, we’ll go through the pros and cons of GST:
GST eradicates the cascading effect of tax:
GST is a complete indirect tax that was made to bring indirect taxation under one umbrella. Most notably, it’s going to eradicate the cascading effect of tax that was evident earlier.
Higher threshold for registration:
Earlier, in the VAT structure, any business with a revenue of over five lakhs was accountable to pay VAT. Also, service tax was excused for service providers with a revenue of less than ten lakh rupees. However, under GST system, this threshold has been increased to twenty lakh rupees, which frees several small traders & service providers.
Composition scheme for small businesses:
Under GST administration. Small business with a revenue of 20-70 lakh rupees can benefit as it provides a choice to reduce taxes by using the Composition scheme. This move has brought down the tax & compliance burden on numerous small businesses.
Simple & easy online procedure:
From registration to filing returns the whole process of GST is made online, and it’s super simple. This has been helpful for start-ups particularly, as they don’t have to run from pillar to post to get different registrations such as excise, VAT, and service tax.
Now, let’s talk about the cons of GST:
Not being GST compliant can attract fines:
SMEs may still not be able to understand the nuances of the GST tax program. They’ll need to issue GST-complaint invoices, be acquiescent with digital record-keeping, and of course, file on-time returns. This entails that the GST-complaint invoice issues must have compulsory details such as place of supply, GSTIN, HSN codes, and others.
GST will mean an increase in operational expenses:
As we’ve already mentioned that GST is changing the way how tax is paid, businesses will now need to appoint tax experts to be GST-compliant. This’ll steadily increase the overhead of small businesses as they’ll need to bear the extra expense of employing tax professionals. Also, businesses will have to train their personnel in GST compliance, further augmenting their overhead expenditures.
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