Get introduced to GST’s advantages and disadvantages

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GST has come up with a whole new taxation system. So if you are a business owner or a taxpayer, you need to familiarise yourself with these things. If you are a business owner, you need to register under the GSTN. There are several advantages as well as disadvantages of GST. Let’s take a look at the benefits first.

Advantages

  1. No need to pay Tax on Tax

This indirect taxation system brings everything under one roof. You don’t have to pay tax on tax. Previously everyone has to face a cascading effect of this tax system. GST eliminated this effect.

  1. GST regulates unregulated industries

Previously different industries especially textile and construction came under the unregulated sector. New provisions have been launched under GST for online payments as well as compliances. These provisions have brought regulations and accountability in these unregulated industries.

  1. Benefits of VAT

Previously businesses which used to earn more than 5 lakhs had to pay VAT. Though the limit was different in different states, they all came under this taxation system. But now service providers whose turnover is less than 10 lakh will be exempted from this taxation.

Now, this threshold reached up to 20 lakh. So, many service providers, as well as small traders, got relief.

  1. Simple registration procedure

GST registration is an online process. The best thing is this process is super easy. Startups don’t have to register for different taxation systems such as excise, service tax or VAT.

  1. New composition scheme

All small scale businesses can get benefit by utilizing the new composition scheme. So now they don’t have to pay a hefty tax like before. So if your turnover is in between Rs 20 to 75 lakh, you come under these small scale businesses.

Apart from that, you’ll find various other benefits of GST. Now let’s check out some of the disadvantages of this Goods and Services Tax.

Disadvantages of Goods and Services Tax

  1. Software purchase

All the businesses have to update their accounting, or they have to buy GST software to avoid problems in their companies. This software has been designed for new billing. So to operate it smoothly they have to give training to their employees. On the other hand, it’ll increase cost as well.

  1. Operational costs have been increased

Previously the taxpaying system was different. Now if you are a service provider, you have to hire a tax professional. So it’ll unmistakably increase the operational cost.

  1. Online taxation system

Previously businesses have to concentrate on pen and paper. Now they can switch into online mode to make payment. Some small scale business owners are facing hassle for this system as they are not familiar with computers.

People have to bear pain when it comes to changing something. The government is trying hard to make this whole process smooth. But it’s true that this new and unified taxation comes with different advantages as well. If you are an e-commerce service provider, you don’t have to pay separate taxes for doing business from one state to other. So these were the main advantages and disadvantages of this taxation system.

Posted in Money