What are Demerits or Disadvantages of Goods and services Tax (GST) in India

Introduction

Like every coin has two sides, so is with the GST. Apart from many advantages or benefits, GST also has a negative side which may also have the far-reaching impact on the economy and business. Here are some of the disadvantages that may arise under GST regime.

• Multiple registrations under each state: There is a myth going viral in the industry that GST is very business friendly as only one registration is now needed to work across India. However, the reality is totally opposite.
  ​As per GST model law, every person has to take separate registration under each state, i.e. if you have the branch in 14 states, then you have to register with each state separately. Further, the worst part is that you need to comply with each registration separately.
   
• Hefty Compliance: There are three returns per month prescribed under GST regime, i.e. 36 returns per year. Further, the technicalities involved under each return will only bring ambiguity and non-compliance which would ultimately shoot up the compliance cost.
  This would really impact the small dealer lot.
   
• Compromised GST: The ‘Indian’ version of GST is not an ideal one. The petroleum products are still not covered under the ambit of GST law nor the real estate. Petroleum products will still be taxed as per the current tax policy i.e. cascading effect will not be nullified, and hence, the possible fall in price will not take place.
  The petroleum products are just an example; GST law is full of compromises.
   
• Taxation of Free Supplies: The step to tax the free supplies cannot say to be an ideal step, as it would have severe consequences. E.g. this will even cover the social cause or goods distributed for free to poor or the needy person.

Maybe the government has failed t examine the consequence of including the free supplies under the tax net.

This is an endless topic, where we can criticise the GST law with n number of points. The industry associations, watchdogs and various other regulators have already provided their inputs to the government of India on the legal provisions meticulously. 
However, it is already a beginning of the new era. As said, it is better to have muddy roads then to have no roads at all. The GST will take the time to settle down and once settled it will provide fruits in a longer run.

Conclusion

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