The Government of India launched a new taxation system, GST, that replaced all the previous taxes with Central and State GST. To understand “what is GST and its advantages and disadvantages,” factoring in its impact on a common man is essential.
Further, most of India’s population comprises middle-class and lower-middle-class individuals from the service or agricultural sector for their basic living. Therefore, the economic impact is witnessed when the price of commodities increases or decreases. In the following section, individuals will find the positive and the negative impact of GST on a common man.
Positive impacts of GST
GST’s impact on the common man may be witnessed by considering the effects of this taxation system on several sectors. Here is a list of positive impacts of GST:
- Simplified the tax structure: Being an integrated tax system, GST extracted several other indirect taxes previously applicable. Such taxes are excise, CST, service tax, VAT, etc. To simplify the tax structure, the Government introduced this system which includes payment of Central and State GST (CGST and SGST).
- Cancelled the tax-on-tax effect: The burden of bearing tax-on-tax and inflationary prices increased a common man’s financial pressure. However, GST made sure to eliminate the cascading effect of taxes, reducing an individual’s tax burden.
- Reduced tax burden from the manufacturing sector: The role of GST in India’s manufacturing sector is directly in line with the impact on a common man. The new Goods and Services Tax reduced the manufacturing sector’s burden, thereby reducing manufacturing costs. Therefore, consumers can purchase items at lower rates. Further, as the manufacturing costs decreased, products like cars, FMCG, etc., are now affordable.
- Affordable prices of goods and services: Goods and services that were expensive earlier are now easily affordable due to the reduced tax burden on various sectors. Therefore, individuals searching for what is GST and its impact on goods prices” can purchase items at a much lesser price without worrying about their financial security. Further, the demand or consumption of goods will also increase with lower prices.
- Increasing demand will boost supply: Generally, with a rise in demand, there’s a corresponding increase in supply. Therefore, for a particular good’s increased supply, its production also increases.
- More employment opportunities: An increase in the production of goods, in the long run, will create more jobs for the common man. However, goods must be available at cheaper rates for a long period to reach this stage.
- Curbed circulation of black money: This taxation system ensures reduced circulation of black money by checking the invalid bill system that traders and shopkeepers follow.
Apart from this, GST has also impacted IT workers in India as it has eliminated the VAT complexities and double taxation.
However, there are some cons to this new taxation system as well. For instance, GST has negatively impacted the telecom sector by increasing its tax burden and other compliances. To that cause, it is important to skim through the negative impacts of GST on the common man.
Negative impacts of GST
In addition to its benefits, GST also has some disadvantages, as mentioned below:
- Lack of GST accounting software: Proper invoicing and accounting are essential for better compliance. However, some companies are yet to develop GST accounting software.
- Consumers are deprived of actual benefits: To increase profit margin, at times, sellers increase the price of items, a cause of distress for commoners. Therefore, checking activities of profiteering is necessary so that the common man can enjoy benefits.
- Compliance burden: Business owners in India need to submit GST and file return timely. The GST filing process is comparatively complicated because of which one must consult a tax professional. Especially for small traders and business owners, tax filing is a complex process.
Nevertheless, individuals looking to open a start-up can take advantage of this unified tax system, curbing the complication of multiple taxes. Moreover, they can further reduce their financial burden by securing a business loan from reputed financial lenders offering a high-quantum loan amount.
Further, some of the lenders provide pre-approved offers for a seamless loan transaction process. You can check your pre-approved offer by submitting basic credentials.
Therefore, by going through the advantages and disadvantages of GST, one can start a business in India and enjoy the aforementioned benefits.
Other than this, anyone who is eligible for GST filing and still not clear about the answer to the question “what is GST?” must factor in the above pointers for a better understanding.