Gst – Pros And Cons

GST – PROS AND CONS NAMAN AGRAWAL –IB1715134 ADITYA KUNAL- IB1715268 SELVA BHARATHY –IB1715148 CHANCHAL MAURYA – IB1715103 SEJAL KEDIA – IB1715114 RITIKA BHATI – IB1715113

PRE – GST ERA The following is the list of indirect taxes in the pre-GST regime: • Central Excise Duty • Additional Duties of Excise • Additional Duties of Customs • Cess • State VAT • Central Sales Tax • Purchase Tax • Luxury Tax • Entertainment Tax • Entry Tax • Taxes on advertisements CGST, SGST, and IGST has replaced all the above taxes.

GST • Goods and Service Tax (GST) is an indirect tax levied in India on the sale of goods and services. • Goods and services are divided into five tax slabs for collection of tax - 0%, 5%, 12%,18% and 28% • CGST: Collected by the Central Government on an intra-state sale (Eg: Within Maharashtra) • SGST: Collected by the State Government on an intra-state sale (Eg: Within Maharashtra) • IGST: Collected by the Central Government for inter-state sale (Eg: Maharashtra to Tamil Nadu)

Value addition in Tax • Goods & Services Tax Law in India is a comprehensive, multistage, destination-based tax that is levied on every value addition.

TAX STRUCTURE IN NEW REGIME Transaction Sale within the State

New Regime CGST + SGST

Old Regime VAT + Central Excise/Service tax

Sale to another State

IGST

Central Sales Tax + Excise/Service Tax

Revenue will be shared equally between the Centre and the State There will only be one type of tax (central) in case of inter-state sales. The Centre will then share the IGST revenue based on the destination of goods.

Tax calculations in earlier regime: Action

Cost

10% Tax

Total

Manufacturer

1,000

100

1,100

Warehouse adds label and repacks @ 300

1,400

140

1,540

Retailer advertises @ 500

2,040

204

2,244

Total

2040

444

2,244

*All values in Rupees

Tax calculations in current regime: Action

Cost

10% Tax

Actual Liability

Total

Manufacturer

1,000

100

100

1,100

Warehouse adds label and repacks @ 300

1,300

130

30

1,430

Retailer advertises @ 500

1,800

180

50

1,980

Total

1,800

180

1,980

*All values in Rupees

Advantages of GST: • GST eliminates the cascading effect of tax • Higher threshold for registration • The number of compliances is lesser • Simple and easy online procedure

Advantages of GST: • Composition scheme for small businesses • Defined treatment for E-commerce operators • Uniform taxes throughout the nation • Unorganized sector is regulated under GST

DISADVANTAGES OF GST • Real estate hit • Cost lier services • GST will mean an increase in operational costs • GST is an online taxation system • SMEs will have a higher tax burden