Complex tax structure brings many disadvantages of GST and Income Tax both.
Disadvantages of GST
- Multiple taxes: GST includes CGST, SGST, UGST and IGST, which is nothing but a new name for existing tax system.
- Implementation in the middle of the year: Businesses followed old tax structure for first three months and Goods and Services Tax for rest of the time. It became impossible to cross over from one tax to the other.
- Exemptions: There was large list of exemptions, multiplicity of rates and exclusion of several items of consumption from base.
- Liquor and petroleum products are excluded from GST. If someone is trading in these goods they have to register in different manner causing chaos and confusion.
- Multiple rates: Because of Goods and Services Tax there were multiples rates on different commodities ranging at 28% which worsened the conditions in economy.
Other Major Disadvantages of GST
- Different GST numbers in different states: We have to take different Goods and Services Tax number while trading in different countries.
- There is substantial increase in cost of compliance, as we have to file monthly GST Returns.
- Rural areas facing problems: Small businesses in rural and backward areas are unable to cope up due to full online registrations and procedure.
- Maintaining proper accounts: Businesses have to maintain proper books of accounts and filing of returns increases cost.
Disadvantages of Income Tax
- Inconvenient: It is generally payable in lumpsum or even in advance making it inconvenient for people. Businesses are required to maintain elaborated accounts.
- Chances of tax evasion: People are aware of tax liability so there are chances of tax evasion. They conceal their incomes from tax officials in order to pay lesser taxes.
- Income tax is not popular among people because they have to bear the burden of tax directly.
- Inequitable: Income tax is non-equitable. A person with high income has to pay more tax as compared to low income groups. The more the income, the more tax payment.
- Not broad-based: It is narrow as a lot of population remains untouched while collecting these taxes. It only includes people with higher incomes.
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