Introduction: What is the Goods and Services Tax (GST) in India?
The Goods and Services Tax (GST) is a tax on goods and services. It is an indirect tax that has mostly superseded many other indirect taxes in India, such as excise duty, VAT, and services tax. The Goods and Service Tax Act was passed by Parliament on March 29, 2017 and into effect on July 1, 2017. To put it another way, the Products and Service Tax (GST) is a tax that is levied on the provision of goods and services.
In India, the Goods and Services Tax (GST) is a multi-stage, destination-based tax that is levied on every value addition. GST (Goods and Services Tax) is a single domestic indirect tax law that applies to the entire country. The GST is levied at every point of sale under the GST regime. The GST Bill was passed by both the Lok Sabha and the Rajya Sabha in 2017. The GST Law went into effect on July 1, 2017.
The advantages of GST
The cascading effect on the sale of goods and services has mostly been eliminated by the GST. The elimination of the cascade effect has had an effect on the cost of items. The cost of items reduces because the GST regime eliminates the tax on tax.
GST is also primarily technology driven. All operations, including registration, return filing, refund application, and answer to notice, must be completed online using the GST site, which speeds up the process. The implementation of GST had a good impact on the Indian economy. This tax has broken down trade barriers between states, bringing the economy together in a single unified market. This type of taxation benefits both manufacturers and traders.
The implementation of the Goods and Services Tax has benefited end customers in a variety of ways. Let’s dive into GST’s advantages in detail now:
Tax evasion and corruption are reduced. Administration of Taxes Is Free
The GST Act has made tax administration more open and devoid of corruption. Tax evasion results in a loss of revenue for the government. For compliant taxpayers, this is a big disadvantage.
Various actions have been taken by the authorities to combat tax evasion:
- GST registration and PAN synchronisation
- At the invoice level, reporting and matching
- Credit reconciliation
- E-way invoices are created.
- Monitoring the transit of goods
- The GST Commissioner for Investigation has been appointed by the Directorate General of Analytics and Risk Management.
- Registration processes that are common
- Streamlined tax filings and standardised forms
- Rules that are both clear and transparent
- Ease of bookkeeping Less revenue losses and higher revenue creation
- Refund of tax payments
- a single tax base
- Goods and services are classified in a universal manner.
Elimination of the Cascading Effect
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.
Exemption Limit Increase
The GST Council increased the exemption ceiling for sales of commodities from Rs 10 lakh to Rs 40 lakh. The northeastern states have a Rs 20 lakh exemption limit. All states have a Rs. 20 lakh exemption limit for service providers, with the exception of special states, which have a Rs. 10 lakh exemption limit. The yearly turnover requirement for the Composition Scheme has been enhanced from Rs 1 crore to Rs 1.5 crore as of April 1, 2019.
This Composition Scheme is available to taxpayers with a yearly turnover of less than Rs 1.0 crore. This maximum is Rs 75 lakh in the North-Eastern states and Himachal Pradesh. This programme relieves small taxpayers of the time-consuming GST paperwork. GST might be paid at a predetermined rate of turnover under this approach.
A dealer under this programme can sell services up to 10% of yearly turnover, or Rs.5 lakhs, whichever is higher, according to the CGST (Amendment) Act, 2018, which took effect on February 1, 2019. A cumulative turnover of different enterprises registered under the same PAN number is taken into account under this programme. Small firms will benefit greatly from this effort to alternate the exemption limit.
GST and the “Make in India” initiative
GST is the backbone of this strategy, as it applies to imports and provides a boost to manufacturing by reducing superfluous costs. Another advantage is the ease of transaction and free flow of commodities across the state boundary due to the elimination of commercial checkpoints. The GST model has unified the Indian market by removing the arbitrary taxation structure. Manufacturing has benefited greatly from lower logistical costs, shorter travel times, and relief from export taxes and refunds.
Lower Compliance Rates
With GST, the number of separate compliances has decreased. Previously, VAT, Excise, and Service Tax each had their own filing and compliance schedules. Depending on the nature of the holding, this was done monthly or quarterly. GST, on the other hand, necessitates the submission of a single return. There are approximately 11 returns, four of which are fundamental filings that must be filed by all taxable persons.
The entire procedure of registration and filing taxes is faster because it is technology driven. It also ensures that the procedure is transparent and that tax collection is carried out legally. The GST Portal allows you to do the following things:
- Filing of the Return
- Request for a refund
- Responses to Notices
- Consumer complaints
E-commerce enterprises should be able to operate with ease.
Initially, the supply of goods across the border for e-commerce enterprises was subject to a variety of tax legislation. The relevant documentation, as well as the VAT declaration and registration number, were required of delivery trucks crossing borders. If the proper paperwork is not produced, the products may be confiscated.
GST has largely eliminated all of these complexities, opening the door for frictionless transactions.
The implementation of GST has resulted in a very transparent and anti-corruption system in the country. The advantages are numerous, and they are not only beneficial to businesses but also to consumers. This taxing regime has helped the country prosper in international trade. The Indian market is currently far more stable than it has ever been. India is in a far stronger position in foreign markets after the implementation of GST, which has had a favourable impact on the economy.