Key Benefits of GST in India

. 6 min read
Key Benefits of GST in India

Goods and Service Tax (GST) is one of the biggest tax reforms that claim Tax from goods and services from the country. The government imposed GST on 1st July 2017. GST is the tax that is derived indirectly by the Centre and State such as the Value Added Tax, Services Tax and Excise. GST was introduced with a simple objective to remove many indirect taxes that were currently active in the country. GST is mainly a value-added tax that is imposed on all goods and services. No doubt that the GST has changed the way the VAT system worked since the day it was launched.

GST has changed the way how the business and the taxation used to work. It was the remark of a new Tax system for goods and services in the country. The basic and simple idea behind the implementation of GST was to simplify the tax system into a streamlined process. Another idea was to make the tax collection process easy and wide for all the business to continue in the country. However, here we have mentioned some of the key benefits of GST in India.

GST’s Benefits in India

As it is known any reform of a system will have both benefits and drawbacks, here the key benefits of the Goods and Service Tax are mentioned for better knowledge and usability in business to be followed by business in India.

1. The singular form of Tax

GST is nothing but a compiled form of all taxation such as Sales Tax, Service Tax, Luxury Tax, Central Excise, and many more. Thus, only a single form of tax has to be paid for any goods bought or services provided to the customer. For instance, a customer has to pay a variable tax for any goods they got from the market and any service they availed. The tax was variable depending on the business and the service the customer had. Therefore, this leads to expenses increasing. To mitigate such issues, the government has implemented the GST in India.

2. The threshold to Business

Previously, any business with a turnover below 5 Lakhs did not have to pay any VAT; however, this was dependent on the State and its policies on tax. Perhaps after the implementation of GST, this has been pushed to 20 lakhs. This, in return, has helped many small traders and businesses to survive and grow in the competitive market. The recent GST has new plans and programs for any business in the market. The list is provided below.

Tax to be Paid

Threshold Limit

Value Added Tax

5 Lakhs (Variable on State, common in most states)


1.5 Crores

Service Tax

10 Lakhs

Goods and Service Tax

20 Lakhs (10 Lakhs for the North-East States)

3. Small Business and GST

As mentioned above the implementation of GST has helped Small business grow with better financial opportunity in the market. Mainly the GST has imposed the Composition Scheme for the Small Businesses. According to the GST Composition Scheme, the easiest and simplest form of tax helps a small business eliminate the bulky amount of tax on goods and services from the market. Additionally, this Composition Scheme also helps the small business pay only a limited amount and fixed payment as a form of GST to the government. Overall, this whole scheme from the GST has brought a burden from the small business and traders, helping them grow their business in the market.

Young business man sitting in office at table and using smartphone

4. Online Procedures of GST

With the implementation of GST, India has put a step forward into the digital transformation of online procedures of various services, including Tax payments. Now any business or any person can simply pay their tax online without any hassle and long-term processes. This online procedure has helped more businesses rather than individuals as the amount of the GST is transferred directly via the internet. Not just this, even the registration process for the GST is easy as well as simple with the online procedures. The business does not have to run for the invoices for the tax payments as the overall process is completed with the online transaction.

5. Easy Methods of GST Payment

Along with online Transaction, the GST payment is made easy and simple with a fixed time and method. This, in return, leads to no compliance of the business to the service and vice versa. Both the Value Added Tax and the Service Tax had return and compliance; however, the similar with GST is at the one-stop process. Thus the overall process is easy and takes less time. In the detailed view, the GST has 11 returns out of which a total of 4 are basic returns which applies to all individuals under GST. However, the other returns are processed on an automation process by itself.

6. GST for E-Commerce

E-Commerce and its marketing procedures were not defined in the earlier versions of the Taxation. The online business had other VAT and its variable laws for such. Before the GST regime, E-commerce had to suffer a lot due to the variable Value Added Tax in different states. For instance, if any e-commerce had to ship an item in Uttar Pradesh, the supplier has to file a declaration about the registration number of the goods and the delivery truck. If not, then the goods will not be passed to the state. However, on the other hand, in states like West Bengal, Rajasthan and Kerala, there was no such system as these trucks were treated as facilitators or mediators. Thus, to simplify the process, GST implementation was necessary. With a singular form of system for tax payment, E-commerce has a new growth in the Indian market. GST and its implications have made all the complications and issues of the variable states in one place. Now for any e-commerce business, there is no VAT based on the state, and thus they can deliver goods freely.

7. Logistics Industry and GST implications

Before the GST regime, the Logistics Industry had to build factories out in every state and inter-state, the reason was to avoid the CST as well as State Entry Taxes. However, the factories and the warehouses were forced to limit their production below the capacity, which in return led to more operating cost. With the implication of GST, the inter-state had to uplift such restrictions, and the entry to the states was put out with a minimal Tax system. All such restrictions have limited the productions of the factories. This then impacted on the labour and thus a limited number of human-workforce was indulged in the factories. Overall, these restrictions have an indirect relation with the unemployment of the country. To mitigate all such problems, the implementation of GST was done and had a better solution for all such problems.

smart factory with icon flow automation and data exchange in manufacturing technologies

8. GST for Unorganised Sector

In India, there are many unorganised and unregulated organisations, mainly in Construction and Textile businesses. Due to the high number of orders, productions and multiple resources, this industry had unregulated market processes. However, once the GST was imposed, these business sectors now have the option of online transactions for better Tax payment in the country. In return, the whole process of Tax payment has new accountability and regulation.

Goods and Service Tax is the most significant reform of the tax system that has allowed better growth and increase in GDP (Gross Domestic Product). Further, it will help the business to grow more and uplift the GDP of the country. According to the study of 2017, the GDP has improved to 6.5% in the introduced year, and with a similar pace, the GDP will move to 7-7.5% by 2018-2019. Undoubtedly, the Small traders and SMEs (Small and Medium Businesses) have been the most beneficial with the GST and its system for better pay in the country. Overall, the GST implementation has benefited the country with many financial methods and procedures to pay is made easy and convenient. However, slight changes in the GST can have more benefits and financial management for the country to gain more GDP. Besides the online process has simplified it at its best.

Also read:

1) What Happens to Indian's Tax Money after Payment?
2) Top-10 Highest Tax Paying States in India
3) Why Do We Pay Income Tax in India? Importance, Applicability & more
4) Types of Direct & Indirect Taxes in India
5) OkCredit: Simple, Paperless & Secure solution for businesses

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