GST is an indirect tax used in India on the supply of goods and services. It is comprehensive as it has subsumed all the indirect taxes. It is levied on goods that are for domestic consumption. It is paid by consumers but it is remitted to the government through the business owners.
It is a consumption-based tax and it is across the country. The business owners have to remit the tax to the government.
Pros of GST
- Easy to regulate the unorganized sector
Through GST the government can regulate the operation of the unorganized business hence the business will operate as per the rules.
- Improved efficiency
There will be improved efficiency as the business owners will effectively provide goods and services to the consumers.
- E-commerce operates will also be involved
It is easy to deal with the E-commerce operators as they will easily pay the tax on the services they provide to the consumers.
- Lesser number of compliances
As the business will be aware of the tax it has to remit to the government then the compliance cases will be minimal as they will charge customers depending on the amount they are to give back.
- Easy procedure
It has an easy procedure to pay the tax hence it does not require professionals so that the business may file the returns.
- It is online
It saves many business people time as the owners of the business can do it from the comfort of their homes provided they have internet.
- It covers small business operators
This avoids congestion as the ones who own small businesses are the ones that will use the scheme hence fast to do it.
- Higher threshold for the registration fee
This will favor business people as the registration fee will not be raised without the notice from the government hence small businesses will not be exploited. Those involved in the taxing offices will have to go by the rules from the government.
Cons of GST
- Connectivity problem
As it is done online, there may be a challenge of network connection and this may make the business owner take a lot of time to file the returns.
- Increased cost
The business owner has to purchase the software for him or her to be able to get the information about the tax returns which comes as an extra cost.
- The higher tax burden for small businesses
The small businesses will have a high tax burden and this may make them not earn any profit from the operation of the business.
- Requires knowledge
As it is an online issue the business person will need to be equipped with knowledge on how to do the online filling of the returns.
- It started its operation in the middle of the year
This becomes complicated for the businesses as it has to file the returns in the middle of the year and this may make many people forget about it hence being charged more lately.
- Increased operational cost
The businesses will face it as it will be an increased operational cost making the businesses put the burden on the consumers.
- The businesses have to be GST compliant
The businesses have to operate as per the rules of the government hence this may make many businesses close down.
GST will result in higher prices of the goods and services as the businesses will strive to pay the tax at the same time earn profit from the business hence the burden will be more to the consumers.