The Goods and Services Tax (GST) subsumes various indirect taxes levied by the centre and states, such as excise, VAT, and service tax, and is hailed as one of the country’s most significant tax reforms. It is imposed on the sale of both products and services in the country.
The GST (Goods & Services Tax) is a tax that is charged on both commodities and services. It is an indirect tax that has mostly superseded many other indirect taxes in India, such as excise duty, VAT, and service tax. Parliament passed the Goods and Services Tax Act on March 29th, 2017, and it went into force on July 1st, 2017.
GST is a multi-stage tax system that applies to the sale of both goods and services. The fundamental goal of this taxing system is to prevent other indirect taxes from cascading, and it is applicable all over India.
Any GST-eligible business must register on the government of India’s GST portal. GSTIN is a unique registration number that will be assigned to all registered organisations.
All service providers, purchasers, and sellers must complete the registration process. GST registration is necessary for every business with MSME registration and a total revenue of Rs.20 lakhs or more in a fiscal year. The processing time is between 2 and 6 days.
CGST (Central Goods and Services Tax), SGST (State Goods and Services Tax), IGST (Integrated Goods and Services Tax), and UTGST (United Territories Goods and Services Tax) are the four variants of GST.
What are the advantages of GST in India?
GST had a good impact on the Indian economy after it was implemented. This tax has broken down trade barriers between states, bringing the economy together in a single market.
This type of taxation is advantageous to both manufacturers and traders. In a variety of ways, the implementation of the Goods and Services Tax has helped the end customers. Following is a list of benefits GST implementation in India:
Cascading effect elimination
Prior to the establishment of GST, there was a cascading impact of taxes, which was eliminated once GST was implemented. The GST has almost completely eliminated the tax-on-tax effect on goods and services.
GST has managed to lower the cost of goods and services by including all indirect taxes under its umbrella. As a result, one of the most important benefits of GST is the consistency of taxes.
Tax evasion and corruption are less likely to occur. Administration of taxes for free
The implementation of the GST Act has made tax administration more open and free of corruption. Government revenues are lost as a result of tax evasion. For compliant taxpayers, this is a major disadvantage. The government has taken a number of steps to combat tax evasion, including:
- GST registration and PAN reporting are synced, and invoice matching is performed.
- Credit card reconciliation
- E-way bills are generated.
- Keeping track of items in transit
- GST Commissioner Appointed to Conduct Investigation
- Analytics and Risk Management Directorate General
Increased the threshold limit
Businesses had to pay Value Added Tax if their sales exceeded Rs. 5 lakh prior to the introduction of the GST. The amount, once again, varies by state.
The threshold value has been increased by Rs. 15 lakh with the adoption of GST, making the new threshold limit Rs. 20 lakh. Small and medium-sized enterprises would be relieved by the increase in the VAT threshold limit.
With GST, there are fewer separate compliances. Previously, the filing and compliance schedules for VAT, Excise, and Service tax were separate. Depending on the type of holding, these were held monthly or quarterly.
The GST, on the other hand, necessitates the submission of a single return. There are approximately 11 returns, four of which are required to be filed by all taxpayers.
Online processing is simple and speedy
The ability to file tax returns online is another huge benefit of the new GST regime. All you have to do now is go to the GST Portal, create an account, log in, and begin filing GST returns. The portal’s user interface is simple and intuitive.
With a rudimentary understanding of computers and the internet, you can file your GST on your own. On the portal, you can get all the information you need about GST jurisdictions, GST rules that must be followed, and all the information you need to file the GST.
What are the disadvantages of GST in India?
Major drawbacks of GST are as follows:
Operating costs have risen
To keep their operations functioning, GST required enterprises to upgrade their existing accounting software to GST-compliant software or ERP.
However, the expense of purchasing, installing, and training personnel on how to utilise GST-compliant software can be significant. In addition, as more businesses are obliged to hire tax professionals to become GST-compliant, the cost of doing business has grown for small businesses.
Small and medium-sized businesses face a larger tax burden
Only enterprises with annual sales of more than Rs.1.5 crore were required to pay excise duty under the previous tax regime. Businesses with an annual turnover of more than Rs.40 lakh are required to pay GST under the new tax structure.
The burden of compliance
Companies must now register for GST in all states where they operate under this taxing scheme. The entire procedure of registering with the regulatory body, issuing GST-compliant invoices, keeping digital records, and filing returns have put a huge strain on SMEs and others.
Furthermore, the infrastructure of all Indian states is insufficient to implement the GST-mandated e-governance paradigm. As a result, numerous businesses are finding it difficult to implement or shift to this new system.
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Frequently Asked Questions
GST is expected to bring buoyancy to the Government Revenue by widening the tax base and improving the taxpayer compliance. GST is likely to improve India’s ranking in the Ease of Doing Business Index and is estimated to increase the GDP by 1.5% to 2%.
Introduction of Goods and Services tax eliminated the cascading effect of taxes i.e. tax on tax. GST reduced the burden of taxes from the manufacturing area, thus manufacturing costs will be reduced. Therefore, the prices of consumer goods are also likely to decrease.
GST is a transparent tax and also reduces the number of indirect taxes. GST will not be a cost to registered retailers therefore there will be no hidden taxes and the cost of doing business will be lower. Benefit people as prices will come down which in turn will help companies as consumption will increase.
Experts also claimed that in many ways, it has streamlined the process. “Based on the one nation one tax ideology, GST has helped in reducing the cascading effect of tax considerations. Also, the multiplicity of compliances under various indirect taxes has been reduced.
The government has appointed senior officers to monitor the implementation of GST with a focus on the resolution of any difficulties being faced by consumers.