Question

The government is in a dillema on whether to adopt the goods and services tax (GST) system or follow the old indirect tax system. As a advisor to the government, how will you convince the government to adopt the goods and services tax system?

• A. GST reduces paperwork as e-bills are generated and tax payment is done online.
• B. A uniform GST rate throughtout the country reduces smuggling of goods .
• C. GST promotes equality as the rich and the poor pay the same rate of tax on goods and services.
• D. Implementation of GST reduces transportation and operation costs of logistics companies.

Answer 1

Answer: (A), (B), (D)

Implementation of GST reduces transportation and operation costs of logistics companies.

Everything under GST is computerised. No paperwork is needed. The intermediaries have to get themselves registered online, generate an online bill known as e-bill, and even pay taxes online. This makes tax paying easier for the intermediaries, and the tax authorities can track GST payments easily. GST makes tax rates uniform across states and union territories. This checks smuggling of goods and also unwanted competition between states in terms of getting more buyers by reducing tax rates. GST also reduces logistics and operational cost of companies as they can set up warehouses at a few important locations instead of every other city.