Merits and Demerits of GST

Merits of GST:

• Removes the cascading effect of tax-on-tax through the Input Tax Credit mechanism.
• Creates a genuine single national market, since goods can now move across state borders without the earlier CST and check-post complications.
• Simplifies compliance, replacing multiple central and state taxes with one, filed largely through a unified online return system.
• Improves transparency and reduces tax evasion, since Input Tax Credit is available only against properly documented, matched invoices along the supply chain, incentivising registered dealers to insist on proper invoicing from their suppliers.

Demerits/challenges of GST:

• Multiple tax rate slabs (rather than a single flat rate) add some complexity to classification of goods/services and to compliance.
• Compliance burden on small businesses, who must adapt to a more formal, technology-driven filing system than some were used to under the earlier regime. …