GST was launched in year 2017. After 2 years what you think there are loopholes that should be resolved.
Asked: October 31, 20192019-10-31T12:18:28+00:00 2019-10-31T12:18:28+00:00In: Finance
What are the GST Loopholes?
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Goods and Services Tax was introduced in India on 1st July 2017. It merged different taxes including import duties and VAT into one single slab for transparent and efficient management of the taxation structure. However, despite various benefits, there are some disadvantages of GST that creates loopholes.
1- Multiple GST rate opens a window of misuse. Currently, the different slabs are 0%, 5%, 12%, 18%, 28% and 28% plus. Vendors can manipulate input credit to minimise the levied tax.
2- Registered brand names attract higher GST. One can evade that by creating not registered but equally popular products.
3- Separating products that would otherwise come as one decreases the amount of tax payable. For example, dividing a Rs. 110 product into two items of Rs. 100 and Rs. 10 can increase profit almost Rs. 10.
4- One of the significant GST benefits is its automated process. However, if a brand opts not to trademark their business to claim tax exemptions, they can avoid automated tax calculations.
There are many advantages and disadvantages of GST for MSMEs in Indian Budget 2019. For any individual, it is vital to understand this new taxation setup and function accordingly.