Demerits of GST

Demerits of GST

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A necessary step forward was the incorporation of GST, which combines multiple indirect taxes on goods and services. However, the debate over the benefits and drawbacks of GST in India and its impact on the Indian economy hasn't stopped since July 1, 2017.

1. Costs more to buy software - In order for businesses to continue operating and comply with the GST, they must upgrade their existing accounting software to GST software. As a result, the cost of purchasing the software and training employees to use the new billing software effectively rises.

2. Higher Tax Costs for SMBs - In the past, SMBs were only required to pay excise duty when their annual revenue exceeded INR 1.5 Crore. Under the GST administration, businesses with a turnover of more than INR 40 million are currently required to pay GST.

3. Increase the Cost of Compliance - Under the new GST system, businesses are required to register for GST in all of the states where they do business. As a result, businesses face an unnecessary burden of tedious paperwork and compliance.

4. Petroleum products are exempt from the GST Council's administration - so there is no tax on them. Additional taxes on these goods include state value-added taxes (VAT) and central excise duty.

5. GST is a tax system that can be done online - The government has made it possible to register for GST and file GST returns online. Small businesses are not well-versed in evolving and advanced technologies and solutions, despite the gradual acceleration of digital solutions by businesses. Many businesses may find it difficult to implement a GST structure.

6. Businesses continued to operate under the previous GST regime for a few months after the introduction of GST on July 1, 2017 - It may be difficult for businesses to adjust to the new GST structure, and some of them operate in parallel with different tax systems, which can cause problems with compliance.

7. IT Infrastructure - Because GST is a system driven by IT, businesses must implement well-equipped infrastructure and cutting-edge tax technology. Only a few states have implemented the e-governance model because many businesses need to upgrade their IT infrastructure. A major drawback of GST is that many states still rely on the manual VAT returns system for their business operations.

8. Training of tax agents - The government agents receive insufficient training for the practical use of the GST software and systems. One of the benefits of GST is thought to be this.

In conclusion, it is important to note that the government has implemented a GST system to integrate businesses into the formal economy and make tax procedures more streamlined. Businesses can reap the benefits of a unified tax system and simple input credits if they comply with the GST. Stakeholders are pleased with the introduction of the GST because it contributes to economic growth. Despite the fact that the GST is a historic tax reform in India, its implementation is difficult due to a number of drawbacks.