GST in India: A Comprehensive Overview of Its Advantages, Disadvantages, and Tax Rates

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The Goods and Services Tax (GST) which started on July 1st 2017 represents a major change to India's network of indirect taxation regulations. The unified platform of GST combines multiple indirect taxes into one structure yet presents businesses and consumers with overlapping advantages and challenges.



Advantages of GST


  1. Elimination of Cascading Tax Effect: Under the former system taxes accumulated at multiple points in the supply chain while businesses could not claim these credits until GST was implemented. The GST system supports input tax credit applications throughout various supply chain steps which minimizes total tax expenses for final customers.
  2. Simplified Tax Structure: Multiple indirect taxes including excise duty VAT and service tax merge under GST as a unified tax structure. By unifying various indirect taxes into one system GST presents a simplified structure which reduces business compliance challenges while making operations easier to manage.
  3. Higher Threshold for Registration: Businesses operating above ₹5 lakh in turnover had to enroll for VAT previously under the old system yet states implemented different registration criteria. The GST system now allows companies to bypass registration if their turnover stays beneath ₹20 lakh (while special category state businesses can maintain registration below ₹10 lakh). This move provides financial relief especially to small traders and service providers. 
  4. Composition Scheme for Small Businesses: Under GST's composition scheme businesses with a maximum annual turnover of ₹1.5 crore can enjoy lower tax rates and simplify their regulatory obligations. The benefits of this tax program extend to small businesses who manage simpler tax requirements.
  5. Enhanced Logistics and Reduced Transportation Time: Businesses handling goods in their movements now enjoy decreased logistics costs and faster transportation times through the combination of check post eliminations and state tax rate standardization under GST.
Disadvantages of GST

  1. Increased Compliance Requirements: Under GST businesses must submit multiple returns and maintain precise documentation which adds complexity to their compliance needs particularly for small and medium-sized enterprises (SMEs).
  2. Higher Operational Costs: Business operations have endured higher expenses because they need to both implement GST-compliant software and train their staff. The path to GST compliance required businesses to buy new accounting technology and professional help for their financial management needs. 
  3. Complexity Due to Multiple Tax Slabs: GST operates with five different tax rates of 0%, 5%, 12%, 18% and 28% resulting in classification issues among businesses while making tax reporting more complex. Under GST the taxation of popcorn varies between 5% and 18% depending on preparation methods and packaging types. 
  4. Impact on Small Businesses: Even though the composition scheme provides relief it leaves small businesses with higher tax rates than the previous system due to their turnover levels exceeding specified thresholds. 

GST Rates for Various Products and Exemptions

GST categorizes goods and services into different tax slabs. Here are some examples:

  • 0% Tax Rate (Exempted Goods):

    • Fresh fruits and vegetables
    • Unprocessed cereals and grains
    • Milk
    • Eggs
    • Salt
    • Books (excluding e-books)
    • Judicial stamp paper
    • Handloom products

  • 5% Tax Rate:

    • Branded cereals
    • Edible oils
    • Tea and coffee (except instant)
    • Coal
    • Skimmed milk powder

  • 12% Tax Rate:

    • Butter
    • Cheese
    • Ghee
    • Almonds
    • Mobiles phones

  • 18% Tax Rate:

    • Flavored refined sugar
    • Pasta
    • Cornflakes
    • Soups
    • Ice cream
    • Toothpaste
    • Hair oil
    • Shampoos

  • 28% Tax Rate:

    • Chewing gum
    • Aerated water
    • Cigarettes
    • Pan masala
    • Automobiles
    • Air conditioners
    • Dishwashing machines
GST does not extend to petroleum products or alcoholic beverages or electricity since each component remains subject to individual state-government taxation. 


The implementation of GST has transformed India's indirect tax structure along with creating one unified market while overcoming various continuing difficulties that affect stakeholders' equity and efficiency.

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