Business Society

Positive and negative effects of GST

The Goods and Services Tax, or GST, was introduced by Prime Minister Narendra Modi and implemented across the country on 1st of July 2017. Dubbed the ‘Good and Simple Tax’ by the Prime Minister and his Cabinet, the implementation came after long deliberation and amidst much opposition from various sectors of the population, including political personalities from the various states. Pushing all opposition aside, however, the GST was rolled out for the general public, bringing about a massive change in the day to day economy for the people. Three months on, the GST has become pretty much part and parcel of our lives. Economists and financial experts have variously called the GST great and senseless, with many calling India unprepared for such a drastic step. In this essay, we will weight these comments and assess the ways in which the GST has impacted the country.

What is GST?

First of all, we need to know what the GST is. It is an indirect tax that has been levied to replace the different taxes imposed by the central and state governments. All goods and services fall under this taxation system, with different values of GST imposed on each category, namely, 0%, 5%, 12%, 18%, and 28%. Apart from this, some goods like gold and precious stones, and luxury items like tobacco and alcohol, have additional taxes and cess levied on them.

Positive effects of GST:

Clearer taxation system

First of all, the GST makes the process of taxation much clearer and transparent for the general public. Instead of having to pay different prices for the same goods in different parts of the country, people now pay a uniform price. It has also effectively curbed the chances of the corrupt practice among institutions of charging extra in the garb of a variety of taxes.

Reduction in real estate prices

Real estate in India has recently seen an immense increase in prices, thanks to the reduction of buildable land and an increase in workforce wages. Besides, this sector is notorious for its association with antisocial, criminal activities, and corrupt government officials. As a result, transparency in prices was almost unheard of, and different real estate companies and individual builders levied arbitrary surcharges, hiking the price much above its base rate. The introduction of the GST is expected to bring down real estate prices by 1-3%, leading to a much more affordable buyer’s market.

Helps cottage industries

The highest GST has been implemented on luxury goods, which includes harmful products like tobacco, increasing the prices and forcing people to purchase less. On the other hand, small businesses and cottage industries have lower GST implemented on them, thus effectively lowering their prices and increasing their sales, and also leaving more capital and profits for the owners.

New courses and higher employment

In a separate but equally important way, the introduction of the new taxation regime, along with the introduction of a new system of tax file returns (taxes now have to be filed on a monthly, quarterly, and annual basis) have translated into a lot more work for the CA firms and independent Chartered Accountants.  Due to this increased demand of CAs, the CA firms have starred to hire fresh graduates in higher numbers than before in order to undertake the hugely increased bulk of data compilation and accounting. This has also led to the introduction of new courses on GST in some colleges.

The GST has also brought about some hassles, especially for the accounting firms and businesses.

Negative effects of GST:

Implementation of new software

The implementation of the GST has forced the accounting firms to change the software that they have used so far to calculate taxes. These software already have VAT, excise and service tax incorporated in them, and the implementation of GST forces the firms to upgrade their systems to comply with the GST parameters, or purchase whole new software. Naturally, this has led to a whole lot of hassle and increased expenses.

Increased expenses

Speaking of expenses, the GST has also considerably increased expenses for accounting firms and small businesses alike in terms of employees. Some small businesses filed their own taxes, and that has become problematic since a lot of people are still not well conversant with the GST, and accounting firms have to employ new people who have been coached in the GST. Apart from that, the implementation of the new GST-complaint software also translates to additional expenses involved in the training of the existing employees.

It is really too early yet to actually pass a verdict on the GST. It has faced much flak and admiration; the imposition of a luxury tax on sanitary napkins has drawn much criticism, whereas the removal of taxes on condoms has been applauded. It remains to be seen whether the controversial taxation system actually pays off in the end and turns into the revolutionary step it was meant to be.

Business General

Positive and negative effects of Unemployment

Unemployment is a major factor of concern in almost all the countries in this world. There are practically more than million unemployed people in this world as of now. Some of these people are willing to work and have no jobs. There are many who have no desire to work and want to remain unemployed. For many it’s a choice of life while for others there is no choice but to remain in this state. There are many who argue that there might some positive effects of unemployment. But to this day, the negatives have somewhat outweighed them. Now there might be various reasons for unemployment. Studies have revealed that there are four types of unemployment. Frictional unemployment, structural unemployment, cyclical unemployment and technological unemployment are the four such types. There are many people who move from one job to another which causes a type of transitional unemployment. This is called Frictional unemployment. Structural unemployment occurs when there is a disparity between the worker and his job. Lack of experience and of jobs occurs in structural unemployment. Cyclical unemployment is when there is genuine lack of work for people. Whenever any company or industry is hit with recession thousands of people are sacked to save capital. Technological unemployment as the name suggests occurs due to cutting edge technologies in the market. These new technologies handle work and as such no manual force is required. Let us look at the pros and cons of unemployment.

Positive effects of unemployment

• The obvious one is, surely not having to wake up early morning for five days a week. We all know what a problem this is. Hearing the constant buzzing of the alarm clock is like a pain to the ears. The best thing of being unemployed is that you can wake up whenever you like, even at 11 in the morning.

• Not having to wait those tedious morning traffics. There have been umpteen numbers of times when people were late because of the horrendous traffic on the way to work. To avoid traffic one had to wake up early to go to work. So by being unemployed you can just let go of such things.

• There is much more time to spend with your family and friends. This is perhaps a very significant positive effect of not having a 10 hour job. If you are at work there is hardly any time for your spouse and children. You just see the children when they go to school in the morning and when they sleep at night. There is hardly any time to attend plays, matches and parent teacher meetings. Being unemployed is the perfect opportunity to catch up on these little things. Then there is time to catch up on old friends and acquaintances.

• Traveling somewhere with your friends and family. Yes, there might not be much money in your bank account but a short trip is going to rejuvenate you. Traveling to a new place will also help to calm the mind and start a new and fresh approach towards life.

• A job where one is sitting continuously for hours behind a desk is not suitable for the body. Being unemployed is the best time to get your body fit and in shape. This way there is also a lesser risk of having any kind of illness.

Negative effects of unemployment

• The number one concern for unemployed people is financial. Everything in this world requires money and being unemployed means no source of income. There will be no money to pay the rent, for everyday needs, food and paying taxes. This will cause some serious issues which will lead to the depression.

• As mentioned above, unemployment leads to a serious of amount of stress and depression. The inability to pay for things will put enormous strain physically as well as mentally. At this time bad thoughts start to enter the mind which might lead to disastrous circumstances.

• Long duration of unemployment might be looked down upon in some places. If you go for an interview after being unemployed for too long, it might not look good for your resume.

• The nation as a whole suffers because of large number of people being unemployed. The job rate goes down and many foreign people come and start working the jobs. In some cases the government even has to give some amount to the unemployed.

These were some of the effects of unemployment. Having a job will only benefit you in the long run. It will earn bread and butter for your family and provide luxuries.