Nowadays, things around us are changing really fast; mostly everything is evolving, whether for good or bad. People at first find it quite difficult to cope with the change, but then everything becomes routine, and we accept it. GST, when the term first came into coinage, it started a turmoil. Everyone was talking about it; everyone was curious to know how it works, which led to a lot of misconceptions around it. In this article, we will try to clear the concept to an extent. Here, we shall walk you through GST’s benefits to India’s indirect taxes in this blog.
When the word ‘Tax’ comes to our minds, we need to understand that tax is levied on us because of the government’s services. It hails from ancient times. There were days when the kings set taxes, then came the days when the British levied heavy taxes. Now when we are self-governed, the practice of paying taxes persists as an obligation to the state.
Types of Taxes
There are two types of taxes—direct tax and indirect tax.
A direct tax is a tax levied on the taxpayer who pays it to the government directly and not to any other person; examples include the Income Tax.
On the other hand, an indirect tax is a tax levied on a marketplace’s goods and services. The indirect tax has no connection with the taxpayer’s earning or profit of the taxpayer and this is a tax that can be shifted from one citizen to the other one. It is collected by an intermediary and is borne by the person who is the ultimate beneficiary of the goods or services.
Overview of GST
GST (Goods and Services Tax) is an indirect tax introduced in the country to replace most indirect taxes like excise duty and VAT. The Goods and Service Tax Act was passed on the 29th of March, 2017, and was brought into action on the 1st of July, 2017. The people in general raised many questions; there was some opposition for obvious reasons, but it prevailed anyway. This tax is levied on the goods and services as its name explains and is the replacement of all the other taxes like custom duty, central excise duty, sales tax, service tax, etc.
GST is a four-tier tax structure that follows four tax slabs-5%, 12%, 18% and 28%.
The items that fall in these four tiers are-
Now the main question is, what good will GST in India do? Let us find out.
Would the Introduction of GST Lessen the Burden of Indirect Tax in India?
Here are a few points that make GST a better alternative than the indirect taxes levied earlier:
1. All taxes under one
The main idea of bringing GST in India was to get all the indirect taxes under the same roof and make the process less complicated. It lessens the cheating to an extent as well. Earlier, there was paperwork and was scope for debauchery. The online mode has a bit of a cost issue, but at least their work is transparent. Earlier Indirect taxes were subject to a lot of scams, the chances of which have been reduced.
2. Relief to small taxpayers
The other benefit offered by GST does increase the tax amount’s capping. Earlier, a business person earning five lakhs as annual income had to pay tax. When GST has been introduced, small taxpayers have been exempted from paying the tax, as the limit is set to over 20 lakhs. In this way, business owners who earn less will pay tax according to their profits rather than being burdened.
3. Online process
Paying the GST is a simple and hassle-free online process. Before establishing the law, businesses such as construction had very disassembled tax positions. Since everything is online, the work has become much more transparent and comfortable. The online process will help you with the burden of physical stress and help you with your time management. Earlier, when GST was not there, things were different and paperwork used to be a problem. It was an issue for the person using the facility as well as for the one providing it.
4. All Tax paid under one return
When GST was not there as mentioned in points above, there used to be a long series of processes that needed to be gone through. People had to file other returns for different taxes. GST’s primary definition is one tax for all of the earlier ones; the returns filed are under one document only, and it becomes much simpler and short.
From the preceding discussion, the answer to the query- 'Would the introduction of GST lessen the burden of indirect tax in India?' is relatively straightforward and affirmative. It is a great step taken by the government. It will lessen the burden that earlier used to be a problem for the government and the citizens. GST has different facets, and the most important and highlighted one is that it includes major other taxes under itself. It is a great step taken by the government as it reduces time consumption. This shows that India is growing, and positive changes are coming. GST was at last brought into existence for the good of people as well as the government.
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4) Types of Direct & Indirect Taxes in India
Q. Are there any drawbacks of GST?
Ans. There are certain drawbacks to GST law; it is an online system, so software costs are now considered. The second thing that we can see as a drawback is that people who worked with paper and pen need time to get used to the new online systems. It is an issue for sure for impoverished people.
Q. What are the three types of GSTs?
Ans. There are three types of GSTs: IGST, CGST, and SGST, which are- Inter-state GST, Central GST, and State GST.
Q. Will a person running multiple businesses require different registrations for each of the businesses?
Ans. The answer will be "Yes," he/she will have to take additional registrations for their different businesses as per Section 25.
Q. What commodities are exempted from GST?
Ans. The list of exempted good and services from GST is extensive, but some of them are- live animals, meat, fish and fillets, milk products, eggs, olive trees and plants, vegetables, fruits and dry fruits, tea, coffee and spices, edible grains, Milling Industry Products, oilseeds, etc.
Q. For which part of the society is GST law the best?
Ans. The small-business owners and those who had to pay Taxes with low incomes are also relieved by this law. The high society businessmen can give a large percentage of tax without being much of a problem, but small proprietors lose a lot to pay tax if it is the same as laid on the prominent businessmen.