What is this GST? Most of us must have the information about what it is, as this has covered recently almost all of the headlines of the news channels and all the headlines of the newspaper too. So, what is this? Let’s try to understand it.
In our country, a consumer, a manufacturer and a retailer all have to play different taxes which ultimately increases the price of the product and also decreases the value of the rupee against dollar. There were huge numbers of taxes which everyone was liable to pay. Respected Mr. Narendra Modi, who is seated at the prime minister of our country analyzed the situation and tried to figure it out what could be the solution of this very problem and his search ended up at GST.
GST stands for Goods and Services Tax. This tax is applied in India in place of all the tax system which was in force before.
There are many advantages of GST over the former system some of them are:-
- Input tax credit at all system:-
It is a system where the manufacturer before starting or setting up a business purchases the inputs for his business or setup. Here, he needs to pay the input tax and then when he sells his product he has to pay an output tax. This output and input tax which are being paid by the manufacturer is been received by the state government. Now, if the product is sold within the same state in which the manufacturer had paid the input tax then the manufacturer at the tie of selling the product gets a grant in output tax.
In the former taxation system the manufacturer, it sells its products in another state, he/she experiences a loss or a price inflation. Now, with this system of tax, everyone has to pay the same tax at everyplace, i.e. even if the manufacturer has invested his money in one state and is going in other states to sell it then he would be liable to receive a grant there also.
- No cascading effect
What this effect actually means? This also would be a cause of the rise in price.
GST will remove eradicate this problem and with this system, a consumer would be liable to pay only one tax.
- Reduced statutory compliances
Every one of us wants to live simple and a less complicated life. The earlier version of the taxation was such that everyone has to pay any taxes for one work. This increase the complexity but the GST is a tax which has replaced all the other taxed and thus made things easier and less complicated
Our country is a developing nation and thus lacks enough technology to adopt this system. Our govt. cannot, even if it tries with his best efforts, make this technology available to all the people of the country and even if it made available also then also the people will face problems while accepting or adopting such a change. Thus, this is the only disadvantage that this system will disturb the current running system and would hit the business the worst.