What are the good sides and the bad sides of GST (goods and services tax)?

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.Once introduced it will replace 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 will bring with it new challenges to face.

The basic idea for introducing GST is converting 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 :

1. SGST or State GST - collected by State Government.
2. CGST or Central GST - collected by Central Government.
3. IGST or Integrated GST - collected by Central Government.

Positive Impact of GST :

• A unified tax system removing a bundle of indirect taxes.
• Less tax compliance.
• Removes cascading effect of taxes.
• Manufacturing costs will 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.

Hence,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.

Let us hope GST proves to be a game changer in a positive way and proves to be beneficial to the common man