Effects on taxpayer under revised GST

Effects on taxpayer under revised GST

GST stands for Goods and Services Tax. It will be a single tax that will replace the existing indirect taxes. The Goods and Services Tax (GST) is one of the biggest economic reforms in India and it is expected that it will revolutionize the Indian Tax System. GST will help to make the taxations system much simpler and will replace the complex taxes like Central Excise, Service Tax, State Value-Added Tax (VAT), Entry Tax or Octroi, Excise Duty, Sales Tax etc. The GST will be implemented from the 1st July 20017.

Types of GST

CGST- Central Goods and Services Tax, paid on all transactions, collected by the Center
SGST-State Goods and Services Tax, paid on all transactions within a State, collected by the States
IGST-Integrated Goods and Services Tax, paid on all inter-state transactions, or import of goods into India, collected by the Center

GST is expected to transform the way India does business and moving ahead on the path of becoming the most advanced and business-friendly country across the globe. The tax system in India is very complex and with the implementation g, the GST will have a greater impact on the development of the business enterprise and other taxpayers on varied scales. The implementation of GST will bring a more transparency into the system and help prevent the multiple taxations occurring on various good and service.

Advantages of GST:

  • GST is a centralized law, which means that the states will no longer have the right and authority to create new laws on taxation towards the goods and services.
  • It will simplify the tax system and makes it easier to understand
  • Implementation of the GST will help eliminate the tax evasion at the different stages
  • It will help eliminating cascading effect of taxes and the tax rates will be comparatively lower and the tax base will widen
  • Reduce the number of indirect taxes
  • After the GST implementation, there will be benefit of the streamlined and standardized the indirect taxes
  • Ease of doing business GST it will decrease the burden on the businesses as they will have to pay only one single tax
  • Will help to create an integrated common national market for India, giving a boost to the Foreign Investment and “Make in India” campaign
  • It will help in poverty eradication by generating more employment and more financial resources
  • Uniform SGST and IGST rates will reduce the spur for evasion by eliminating rate arbitrage between the neighboring States and that between intra and interstate sales.
  • It will be cheaper to purchase input goods and services for production from other states.
  • With the implementation of GST, the tax base is expected to increase significantly
  • Help to promote shift from the unorganized sector to organized sector
  • Prices of the goods and services will fall and lower prices means more consumption and demand which in turn means more products that will help in growth of industries
  • It will help make the tax collection and compliance simple
  • Help in making the supply chain management more efficient

Every sector of the economy whether the industry, business including Govt. different departments and service sector will have to bear the impact of GST. The GST will create a single, integrated Indian market to make the Indian economy stronger. Experts say that GST (Goods and Services Tax) is likely to improve the tax collections and Boost India’s economic development by eradicating the tax barriers between the States and integrating India through a uniformed tax rate. Under GST, the tax burden will be less and divided equitably between goods and services, through the lower tax rates, increasing the tax base and minimizing the tax exemptions.

Earlier the taxpayers with the annual turnover of more than 5 lakhs needed to register for VAT and in some states this amount varied to Rs 10 lakhs.With the GST implementation, businesses with a financial year turnover of Rs 10 lakhs will require registering for the good and service tax (GST). The Taxpayers with an aggregate turnover in a financial year up to [Rs.10 lakhs] would be exempt from tax. And the businesses with an annual turnover of Rs. 10 to 50 lakhs will be taxed at low rates.

The aggregate turnover will be computed on all India basis. For the NE States and Sikkim, the exemption threshold will be Rs. 5 lakhs. All taxpayers eligible for threshold exemption will have the option of paying tax with input tax credit (ITC) benefits. All the Taxpayers making the inter-State supplies or paying tax on reverse charge basis will not be eligible for threshold exemption.

The taxpayers will not be required to maintain the records and show compliance with a myriad of indirect tax laws of the State Governments and Central Government like the Entry Tax, Central Excise, Service Tax, Central Sales Tax, VAT, Octroi, Entertainment Tax, Luxury Tax, etc. The taxpayers will only need to maintain the records and show compliance in respect of the Central Goods and Services Tax Act and State (or Union Territory) Goods and Services Tax Act for all intra-State supplies and with Integrated Goods and Services Tax for all inter-State supplies.

GST will bring more transparency to the system of the Taxation which will help the different industries to take the advantage of simplified tax regime.

Earlier because of the complex taxation system the taxpayers were unwilling to pay the taxes. However, with the new taxation compliance and simplified procedure people will be encouraged to pay their taxes timely. GST is the biggest economic reforms and will benefit the common man. Additionally, it will simplify the taxation process than ever and make the entire taxation process transparent. This will help in the increased tax base and bring more evident changes in the Indian economy. Certainly, there will be advantages and disadvantages of GST implementation; however, it is advantageous to accept the change move forward to contribute to the growth of the economy.

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