Advantages and Disadvantages of GST Registration
GST is one of the greatest changes in the tax system of India. It removes all other unnecessary taxes on goods and services. The full form of GST is Goods and Service tax. GST is a kind of indirect tax levied on goods as well as services. This tax is levied at every stage of the production process.
GST has more advantages than all other previous taxes. Indian Government introduced the GST act on 1st July 2017. This tax replaced all other previous taxes on goods and services. There are several advantages of GST for businesses. GST helps to build an image of your company. Apart from that, it also helps businesses to grow in different states of India.
Types of GST in India
GST is a common tax in India that is levied on products and services. It differs according to the different products and services. There are 3 types of GST in India such as:
The full form of SGST is State Goods and Service Tax. This tax is levied by the state government on intra-state goods and services. It replaces all other taxes such as luxury tax, UGST, octroi tax, and so on.
CGST is Central Goods and Service Tax. This is levied by Central Government on intra-state goods and services. The revenue collected through these taxes goes to Central Government and state government.
IGST is Integrated Goods and Service Tax. It is levied by the center and state government on inter-state goods and services. The revenue gathered through IGST is divided between the center and state governments. This tax helps to get Input TAX CREDIT.
Advantages of GST
GST was introduced in July 2017 by the Indian Government. It is beneficial for small and large businesses in many ways. Now, let us discuss the different Advantages/ benefits of GST in detail.
Removal of Cascading Taxes
There were many indirect taxes on goods and services before GST. Every businessman has to pay indirect taxes at every level to enter different states. With GST, all other indirect taxes are removed. Now, there is one common tax on all goods and services. GST reduces the cascading effect on all transactions.
Less Compliance Work
Before GST, the businesses have to file many documents to get a license. Now, it is very easy to do Online GST Registration in Delhi by submitting address proofs and ID proofs. There is very little compliance work in getting GST registration numbers these days. Less compliance work will save time and make your GST registration much simpler.
Organizes Every Industry
One of the major benefits of GST Registration under Composition Scheme is that it organizes many unorganized industries. Before the introduction of GST, many industries were not organized such as textile and construction industries. After the GST introduction, there is an online procedure for return filing and payments. The online process reduces hassles in these industries. GST has brought regulation in these industries.
Gives Certification to Businesses
One of the major GST benefits is that it gives a legal identity to your company. GST registration will give you the title of a certified dealer of goods and services. It also creates trust in the eyes of consumers. You can even expand your business after obtaining a GST registration number. Moreover, certified providers can do business in the long run after getting a GST registration number.
Gives a Legal Right to Businessmen
Businessmen will get a legal right to collect taxes from the customers with the help of a GST registration number. They can pay the credit of paid taxes to consumers or suppliers. Every businessman will receive a legal right after taking the GST registration number.
Decreases Transportation Costs
One of the biggest advantages of GST Registration is that it reduces transportation costs. GST has decreased border checks on the transactions of various goods between states. Reduction in border checks will automatically reduce transportation costs. Moreover, the GST registration number has reduced logistics costs. GST will increase the savings of the businesses.
Increases Chances for Business Loans
One major GST registration advantage is that it helps businesses to get business loans. Small businesses will get an advantage of a loan facility from various banks and financial institutions. Besides, GST registration also helps small businesses to grow and expand in different states of India.
Removes Hassles of Tax Evasion
One of the biggest GST benefits is that it gives input credit to the producers. This system will reduce tax evasion problems in various sectors. Under GST, no business can escape from paying tax or doing any other illegal practice. Furthermore, GST registration has brought regulation to many companies and businesses.
Disadvantages of GST
With several advantages of GST, it also has some disadvantages of having GST registration such as:
Increases Operational Costs
GST replaced different indirect taxes on goods and services. With a common tax, the taxation procedure is different from before. So now, the companies will have to hire tax consultants and tax professionals to calculate GST. Hiring tax experts will increase operational costs in small businesses. This is a major GST registration disadvantage for new and small businesses.
A Total New Taxation System
This is another disadvantage of GST. It is a new type of indirect tax levied on goods and services by the Indian Government. The process of GST registration is online and not every small business can understand it thoroughly. Adapting to GST is not an easy task for many small businesses and might take a long time for them to understand GST.
One major disadvantage of GST is that it came into effect in July. The normal financial year starts from March and ends on 1st April. So, the businesses will find it difficult to calculate GST tax according to the financial year. The new tax regime is very confusing for many new businesses. One of the major disadvantages of GST Registration is that it will take a long time to understand for businesses.
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