Advantages and Disadvantages of GST: What You Should Know

The Goods and Services Tax (GST) has revolutionized India’s tax system by replacing multiple indirect taxes like VAT, excise duty, and service tax. Its four-tier tax structure (5%, 12%, 18%, and 28%) brings clarity, while the input tax credit (ITC) mechanism prevents the cascading effect of taxes, reducing business costs and ensuring uniform compliance.
Despite its advantages, GST has increased the compliance burden, particularly for small businesses and MSMEs, requiring frequent return filings (GSTR-1, GSTR-3B, etc.). Technical issues, ITC mismatches, and complex tax slabs pose operational challenges, impacting cash flow and administrative efficiency.
The implementation of e-invoicing, e-way bills, and digital tax filing has enhanced transparency, curbed tax evasion, and supported economic growth. However, issues such as delayed refunds, higher tax rates on luxury goods, and dual tax administration (CGST & SGST) create confusion, highlighting the need for further policy simplifications.
In this blog, we will delve into the key benefits and drawbacks of GST, its impact on businesses, and practical strategies for managing compliance. Additionally, we will explore potential reforms to enhance the GST framework for a more efficient tax system.