India's Goods and Services Tax (GST) system, implemented in 2017 has been a subject of debate and criticism due to its high tax rates and additional cess levied on certain goods or services. Businesses have expressed concern about the financial burden imposed with rocket like GST rates that matches nowhere in the world as a fair amount, on a target in sectors like automobiles, aerated drinks and luxurious goods, where the GST rate can reach up to 28%. This, coupled with an additional cess of up to 15% on certain goods has significantly fuel the cost of doing business and prices of consumer goods.
The impact of high GST rates and additional cess has been felt across industries. Automobile manufacturers have seen a decline in sales due to higher prices, while small businesses in the unorganized sector have struggled to fullfill compliances with this complex tax architecture. Consumers have also been affected because of higher prices of goods and services, leading to concerns about the overall cost of living.
Critics argue that the high GST rates and additional cess are stifling economic growth and discouraging investment. Businesses are hesitant to expand or invest due to the increased tax burden load and some have even considered shifting their operations to countries with lower tax rates like Singapore etc. Furthermore, complexness of the GST has created a compliance headache for businesses from smaller ones with limited resources to of livelihood range.
The government has defended the GST system, stating that it has simplified the tax structure and improved tax compliance. Moreover, argue that the high rates are necessities to generate revenue and finance essential government services. However, there's no acknowledgement regarding the concerns of businesses & consumers and there's no expression of a goodwill to consider reducing the GST rates and cess in the future.
Despite the government's stance, the issue of high GST rates and additional cess remains a significant challenge for businesses and consumers in India. The government needs to strike a balance between generating revenue and supporting economic growth. A more balanced approach to taxation could help alleviate the burden on businesses and consumers. Together creating a more conducive environment for economic development and betterment of living standards can be a win win situation for both.