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Question
How good is the system of G.S.T as compared to the old tax system?
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Solution
The system of G.S.T is good as compared to the old tax system in the following ways:
- Abolition of different tax structures - The implementation of GST resulted in the abolition of state-imposed taxes such as value-added tax, entry tax, octroi, and luxury tax as well as service tax, union excise duty, central sales tax (collected by states), and customs duty. Cess, resale, extra, and turnover taxes, among others, have all been abolished.
- Widening of tax bases - The GST has broadened governments' tax bases. Government administrative expenses have decreased as a result.
- The benefit of Input tax credit - Every stage, whether for the manufacturer, middleman or end user, is subject to the GST levy. The assessee benefits from an input tax credit side by side, which means he simply has to pay the difference between output tax and input tax. As a result, GST has eliminated the tax's cascading effect, following in the footsteps of VAT.
- Neutralization to process, business models, structure, and location - Because of the neutrality of the tax regime, GST is expected to improve economic development, efficiency, and sustainability.
- Because of the lessened effect of tariffs on numerous commodities, GST may contribute to an increase in exports, giving exporters an advantage over their competition in the worldwide market.
- Increased demand and production of goods and services - Because of the GST's lower production costs, manufacturing facilities would grow and there would be more demand for goods and services.
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