The real estate market will be negatively affected by GST as it will have an 8% increase in the cost of new house which will lead to a 12% decrease in the demand.
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'Limitations of Gst'
It is believed that there will hardly be any reduction in the tax layer of the current tax payer as the new coined CGST and SGST are nothing but new names of service/excise and other state central taxes. Branded goods and electronic items might become expensive after GST roll out. Aviation industry has been adversely affected by GST as it has led to an increase of 15% compared to the earlier service tax on airfare which varied from 6 to 9%. Learning and adopting the new system will have teething troubles and would disturb the entire eco system.
Limitations of Previous Tax Structure and How Gst Is an Improvement Upon It
Indirect taxes are regressive and not equitable we can say this as when the salt prices rose both rich and poor paid the same amount as the tax is wrapped in the price. The tax imposed on goods with elastic demand might not bring in much revenue as the tax will raise the price and contract the demand. Industries are discouraged if taxes are levied on raw materials as it increases the cost of the production. Its uneconomical as the cost of collection is high every source of production has to be guarded. Administrative staffs are required to administer such costs which turns out to be a costly affair.
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GST has made life simpler as it has replaced 17 indirect tax levies and compliance cost will fall. Revenue will get a boost as input tax credit will encourage suppliers to pay taxes. GST has made transport a lot more smoother as it has removed the interstate check posts this has reduced transport costs, fuel use and corruption.GST has made collection of direct tax more effective as there will be seamless flow and availability of common set of data to both the center and the states. People who were earlier outside the tax net have sought GST registration. It has expanded the tax base as more people find the benefits of GST. There will be more transparent and effective taxation of imports as the full taxes will be levied when imported goods first arrive to the country with full tax credits available. Textile and clothing sector is now fully under the tax net as previously some part of value chain especially fabrics were outside the tax net leading to informalisation and evasion.
