Implemented in India from July 2017, the Goods and Services Tax (GST) system is a ray of hope amidst the global economic crisis. The introduction and implementation of the Goods and Services Tax (GST) system, marks an essential economic juncture of India.
This tax system primarily aims at bringing in uniformity with regards to the tax administration in the country, and moves towards the idea of “one nation, one tax”. Both the central and the state level indirect taxes levied come under a singular umbrella with the help of this economic reform.
Components of the GST System:
Gradually eliminating the cascading effects of taxes, the GST system in India offers a number of benefits. However, in order for one to have a clear understanding of the advantages of the GST, it is essential to first understand the Components of GST, comprising:
- State Goods and Services Tax (SGST), which is the State Government levied tax.
- Central Goods and Services Tax (CGST), which is the tax that the Central government collects.
- Integrated Goods and Services Tax (IGST), which is the Tax applicable based on the Central Government’s inter-State supply of goods and services.
Advantages of GST:
The GST details have positively influenced the economy of India, traversing inter-state barriers coming in the way of trade, thereby establishing a sense of togetherness. Moreover, as reported, the consumers have largely benefited from the introduction of this Tax system. Let us now have a close look at how the Goods and Services have been worthwhile.
1. Reduced Tax Evasion
The implementation of the GST Act has greatly helped tax administration be transparent and corruption-free. The evasion of tax, as a detrimental practice results in the outflow of government revenues. There has been a substantial drop in the evasion of taxes ever since. To curb these growing practices, numerous measures and steps have been strategised and undertaken by the authorities. It has been possible to bring about such a palpable change in the Indian economy with regard to tax evasion by announcing the orders:
- To sync GST registration and PAN
- To both report and match at the invoice level
- To reconcile credits
- To generate e-way bills
- To track the movement of goods
- To appoint a GST Commissioner categorically for investigation purposes
- To appoint a Directorate General of Analytics and Risk Management
2. Procedural Benefits:
The Procedural Benefits of GST can be determined while keeping track of GST registration. Online GST registration and offline GST filing are easy, however, needs to follow:
- A general set of procedures for registration
- A decrease in the tax filing
- Following uniform formats with regard to tax filing
- Implementation of clear and transparent rules
- Substantially lessening revenue leaks
- Generating better revenues
- Refunding taxes
- Forming a common tax base
- Having a universal system of classification with regard to goods and services
3. Eradication of Cascading Effects:
The cascading effects in the pre-GST period were extremely evident, which has been eradicated by the introduction and implementation of GST elimination. The tax-on-tax impact on goods and services has now ceased to exist with the advent of GST. Covering all the indirect taxes under a singular umbrella, GST calculating is extremely successfully bringing down the cost of goods and services. The economy of any country aims at achieving a sense of unity, that GST is providing, thereby serving as a beneficial tax-system.
4. Technologically Driven:
One of the central advantages of the GST system is that it is technologically driven. The processes of registration, as well as the filing of returns, are escalated. By being technologically driven, GST ensures the elimination of corruption, and a clean, legitimate tax collection procedure. The online GST Portal can further be seen supporting registration, application for a refund, return filing, response to notices, consumer grievances and other necessary activities.
5. Compliance Reduction:
GST has paved the way for a substantial reduction in the number of separate compliance. The earlier presence of VAT, Excise, Service generally saw the scheduling their own filing and compliances. These were either performed monthly or sometimes quarterly, largely relying on the nature of holding. GST possesses a certain requirement, however, which is the filing of a single return. Among the 11 present returns, 4 are basic returns that require to be filed by all taxable persons.
6. Exemption Limits Allotment:
The GST Council has been known for exempting the limit to 40 lakhs for the sale of goods. The exemption limit allotted for the Northeastern states is of Rs 20 lakhs. For the service providers for all states is 20 lakhs, apart from the special states with the allotment of an exemption limit amounting to Rs.10 lakh.
After coming into effect in 2019, the turnover of the Annual Composition Scheme was made Rs 1.5 crore from the previous margin of Rs 1 crore. Any taxpayer having an annual turnover of below Rs 1.0 crore can comfortably avail for this Composition Scheme. However, in the case of the North North-Eastern states as well as Himachal Pradesh, this allotted limit is 75 lakh.
This scheme helps small taxpayers from the GST formalities. Under this system, GST has to be paid at a fixed turnover rate. As the amended CGST Act of 2018 states, dealers falling under this scheme are eligible for supplying services up to 10% (annual turnover), or avail for Rs.5 lakhs, depending upon their own convenience.
7. E-commerce businesses and Their Easy Participation:
For all e-commerce businesses, previously, the import of goods across the border would invariably fall under variable tax laws. The delivery trucks to cross the border were ordered to produce certain necessary documents, as well as the VAT declaration and registration number. The situation after the entry of GST in Indian Economy, the general scenario in this area has developed, providing some comfort.
8. Uplifting Manufacturing:
The GST application on imports and the push for manufacturing with a cutting of extra costs is extremely beneficial for the Indian Economy, often serving as its greatest strength. The comfort provided in the transactional domain, and a steady, free flow of goods through borders, further add to this, effectively ensuring the elimination of commercial check posts, highlighting another favourable aspect.
Persistently and successfully replacing the overall random taxation system, the GST system has reportedly contributed a whole lot in uniting the disintegrated Indian market. The manufacturing process is constantly fuelled by the efficient reduction of the costs taking account of logistics, a decrease in the transit hours, and exemption from export taxes. Furthermore, the refunds have its own role to play in the process, widening the scopes for the prosperity of the Indian Economy.
In conclusion, it can be observed that the introduction and implementation of the Goods and Services Tax can be regarded as one of the most important steps taken to develop Indian Economy. The unifying agenda vastly merges the central and the state under a single roof, into a single tax.
It is extremely beneficial for the businesses, the consumers, as well as for the larger picture concerning the nation, and its tax policies. A noticeable drop in the tax burdens only promises ease, and by being transparent and clear, GST, and GST services are sure to do more good to the industries and Economy- Both nationally, and internationally.
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Q. Can provisional GSTIN be used until a new one is issued?
A. Yes, the provisional GSTIN (PID) can be used until the final GSTIN is issued. PID and final GSTIN are the same. However, Provisional GSTIN (PID) should be converted into final GSTIN within 90 days.