The Goods and Services Tax is aimed at reducing indirect taxes and unifying the Indian economy. After its implementation, it has its fair share of supporters and critics. Let’s have a look at the advantages and disadvantages of GST.

Advantages & Disadvantages of GST 

Let’s talk about the advantages and disadvantages of GST.



Important Advantages summarized in a story –

  • GST has combined a variety of indirect taxes under one umbrella, reducing the complexity of taxation for service and product firms.
  • GST Experts say the implementation of GST would reduce the cost of goods and services in the near future. This is because they have now removed the cascading effect of a collection of VATs and taxes.
  • Industries offering services with a turnover lower than Rs.20 lakh are excluded from having to pay GST. The level is at Rs.10 lakh in the case of North-Eastern states. It will prevent complicated taxation procedures for small businesses.
  • Under the GST taxation system, firms with turnover up to Rs.75 lakh will profit from composition schemes and pay just 1 per cent tax on their turnover. That will allow them to adopt a simpler process of taxation.
  • GST is designed to reduce corruption and non-receipt sales
  • GST eliminates the need for small businesses to pay excise taxes, sales tax and VAT.
  • GST brings transparency and control to unorganized sectors such as the textile industry.
  • Through GST replacing various state and central taxes, the tax collected is likely to be distributed nationally, providing development funds to India ‘s growing or undeveloped areas.
  • GST has lowered taxes on some goods by 2 percent and others by 7.5 percent, for example on smartphones and cars.
  • GST provides fiscal uniformity and allows for unified registration. It offers smaller companies the ability to file their tax returns through an simple online platform every quarter. It lowers the tax multiplicity because they do not have the money to employ tax experts.
  • GST lowers transportation costs by reducing border taxes and by addressing inconsistencies in the check-post. A 20% decline in the cost of logistics for non-bulk commodities is simply an expected result.
  • GST leads to a positive effect on India’s GDP. Over the next few years it is projected to grow by at least 80 per cent.
  • With GST coming into effect, the risk of tax evasion is reduced completely.


Important Disadvantages summarized in a story –

  • Increased software licence costs which can help with the GST filing process contribute to higher operating costs for many companies.
  • To many business owners across the country, GST has brought confusion. SMEs with a total income of Rs.75 lakh may take advantage of the composition scheme, and pay 1% turnover tax and pay fewer compliances; the trade-off, however, the downside is that they might not claim input tax credit.
  • GST has been criticized and called a ‘Disability Tax’ because it now taxes things like braille paper, wheelchairs, hearing aids etc.
  • The uncertainties in drug taxes have seen manufacturers abandon their reward programs which would inevitably impact customers.
  • The financial sector’s GST transaction fees have risen i.e from 15% to 18%.
  • Insurance rates are becoming costlier with GST.
  • The effect of GST mostly on the real estate market resulted in an 8 percent rise in the price of real estate leading to a 12 percent decrease in demand closely after it came into practice in June 2017. That can be a short-term phenomenon..
  • Petrol is not under GST, which runs contrary to the principles of commodity unification.