GST or Goods and Service Tax is a replacement of all indirect taxes which was earlier imposed by the State Government and the Central Government. The new taxation system brings all taxes under one roof. This has eradicated the cascading effect on the prices of goods and services. There are various other advantages and disadvantages of GST which are mentioned below:
Advantages of GST:
- Creditable input tax:
The burden of tax has been reduced on the manufacturer. This means that when manufacturers pay tax on their output, they subtract the tax levied on their outputs.
To avail the benefits of GST, it is important that the retailer gives out complete information. This diminishes the chances of having hidden costs and taxes.
- Fewer compliances:
In the earlier tax regime, several taxes had to be paid separately. Now, after GST registration, a company has to pay just one return.
- Better logistics:
With GST, transporting goods from state to state has become much easier. Earlier there were various restrictions which have now been demolished. Warehouses are no longer required to be set up in every state or city. This has reduced the overall operational cost and the cost of logistics has also gone down.
* For anyone who needs to calculate GST, this free GST Calculator can be useful. This is one of the best tools that can help you become GST-ready.
Advantages of GST:
- Being GST-compliant
Small businesses which haven’t yet signed for GST may have to learn about the taxation system fast. They need to have the knowledge of GST-compliant invoices and start using digital means to keep records of transactions.
- Increase in operational costs
With the change in the method of tax payment, there has been an increased demand for tax professionals. Businesses have started hiring professionals for handling GST and additionally training employees to become GST ready. This has added to the operational cost for businesses in India.