Major Disadvantages of GST in India
Goods and service tax also known as GST is an indirect form of tax which has been levied in India for the supply of goods and services. GST came in to effect on 1 July, 2017 after an amendment was made by the Government of India. GST has replaced the pre-existing system of tax which was levied by the central and state government. It is a very comprehensive method of levying taxes since it has subsumed the indirect taxes of all states except a few. Not only comprehensive, it is also multi staged since it is imposed at every stage of the production system but still is refundable to all the parties involved in the process except the final customer. GST comes under the destination based tax collection since it is collected from the consumer instead of the origin point. However GST implementation has been criticised greatly by various global financial industries and several sections of the media as well as the political parties of India. Its implementation has been criticized even more by Indian businessmen due to various problems including delays in tax return.
Disadvantages of GST implementation
Although GST was one of the greatest tax reforms made in India in regards to the indirect tax structure, it still has several shortcomings.
-
GST is challenging for small businesses
When it comes to GST, everything starting from the registration process to the return and payment is done online. This is completely opposite to the older tax regime where every step was carried out on paper. The digitalization has made it difficult for small business companies to file returns.
-
Increased business cost
GST has completely altered the manner in which tax is paid. This impact and change is felt mostly by small business companies. Initial tax paying process required the business owners to file tax three times every months, making it necessary for them to hire tax professionals. However due to the change in the entire tax paying process, the business owners had to get expert opinions and get the professionals trained fir the change. Although this was not much of a problem for large business companies, but when it comes for small companies, the increased cost of hiring professionals is definitely increasing their overall business cost.
-
Hurried implantation of the GST regime
GST was introduced on 1 July, 2017 which is the middle of the financial year making it extremely difficult for the business companies to cope up and adhere to the newly formed compliance issues. The hurried implementation of GST did not give the companies enough time to understand the technicalities of the tax paying process making it very difficult for them to shift to the new tax regime immediately without any previous preparation.
-
Multiple tax rates
Understanding the details of tax paying could be difficult for most of the people. Instead of simplifying the process, GST made the entire process even more complex by bringing multiple tax rates for different states of India. The tax rates under GST kept changing for several months making it difficult for the business owners to
Also read: ISO Certification Consultants in Gurgaon, Get Tailor-Made Consultancy Service for Company Registration
