GST Benefits: Things You Might Have Missed

The Government of India introduced The Goods and Services Tax (GST) on the supply of products and/or services within the country with an aim to bring a uniform taxation process by removing multiple indirect taxes, such as Service Tax, Purchase Tax, Central Excise Duty, Value Added Tax, Entry Tax, Luxury Tax, Local Body Taxes, etc.

The pre-GST era saw a varied number of taxes being collected in different form by the Government. However, the introduction of GST is said to offer benefits to the government, the industry, as well as the citizens of India. The price of goods and services is expected to reduce under the new reform, while the economy will receive a healthy boost. It is also expected to make Indian products and services internationally competitive.

Uniform Taxation was the Government’s main focus. The objective of GST is to drive India towards becoming an integrated economy by charging uniform tax rates and eliminating economic barriers, thereby making the country a common national market. GST is also seen as a major boost to one of the most ambitious project of the Government, ‘Make in India’. This, as goods that are produced or supplied in the country will be competitive not only in national markets, but in the international markets as well. Moreover, IGST (Integrated Goods and Services Tax) will be levied on all imported goods. IGST will be equal to State GST + Central GST, more or less, thus bringing uniformity in taxation on both local as well as imported goods.

The cascading of taxes will be prevented by GST as the whole supply chain will get an all-inclusive input tax credit mechanism thereby streamlining business operations at each stage of supply, thanks to the seamless accessibility to input tax credit, across products or services.

Conformity / Compliance will be simpler through the harmonisation of tax rates, procedures, and laws. Synergies and efficiencies are expected across the board thanks to common formats/forms, common definitions, and common interface via the GST portal. Inter-state disputes such as those on e-commerce taxation and entry tax that currently prevail will no longer cause concerns, while multiple taxation on the same transactions will also be removed.

The previous tax regime had service tax and VAT, and they both had their own compliances and returns. GST is likely to merge them and lower the number of returns as well as the time spent on tax compliances. GST has around 11 returns under it. Four of them are basic returns that are applicable to all taxable entities under GST. Although the number of returns could increase, the main GSTR-1 shall be manually populated, while GSTR-2, GSTR-3, AND GSTR-4 shall be auto-populated.

GST has been seen as a major boost for number of activities and common man in general. Common Man will be benefited as;

  • A good number of products and/or services are either exempt from tax or charged at 5% or less.
  • GST will endure proper share for the poor
  • Small traders will find themselves on a level playing field.
  • Simplified tax structure with fewer exemptions.
  • Products and services will be allowed to move freely across the country.
  • Increased competition between manufacturers and businesses will benefit consumers.
  • Items such as movie-ticket prices, two-wheelers, televisions, stoves, washing machines, SUVs and luxury cars, two-wheelers, etc. will be cheaper

 

In addition to common man, the GST benefits Industry & economy. Let’s see how?

  • GST is slated to creation of a unified common market.
  • Increase in manufacturing processes.
  • Enhancement of exports and investments.
  • Generation of more jobs through enhanced economic activity.
  • Uniform procedures for registration, filing of returns, payment of taxes, and tax refunds.
  • Elimination of cascading of taxes thanks to the seamless flow of tax credit from the supplier or manufacturer to the retailer or user.
  • Small scale suppliers can make the most of the composition scheme to make their goods less expensive.
  • Higher efficiency with regards to the neutralisation of taxes so that exports are globally competitive.

 

As technology will be used heavily to drive  gst, taxpayers will have a common portal (GSTN). The procedures for different processes like registration, tax payments, refunds, returns, etc., will be automated and simplified. Whether it is the filing of returns, filing of refund claims, payment of taxes, or even registration, all processes will be done online via GSTN. The verification of input tax credit will be done online too, and input tax credit across the country will be matched electronically, thereby turning the process into an accountable and transparent one.

 

GST Benefits – Frequently asked Questions

Questions Answers
What is GST? GST refers to Goods and Service Tax
Will the GST regime see more economical boost Yes. GST is predicted to improve economy to a considerable extent in the coming years
Will GST see uniform tax procedures? One of the highlights of GST is to set up a uniform tax procedure by removing a number of indirect taxes.
How will technology benefit the use of GST? The implementation of technology in GST will see a common portal for all tax payers.
How would Industry and trade benefit from GST? With GST, Industry and trade will see a lessened tax burden.