The GST (goods and services tax) system brought into place on the 1st of July 2017 in India. The execution of the GST has been one of the remarkable indirect tax reforms in India. It is compulsory to file GST return online if your business’s turnover exceeds the GST law’s threshold limit. But before that, it is crucial to determine the business form.
On the tax front, the ‘one nation, one tax’ reform included some of the indirect taxes levied by the state and centre and brought inclusiveness and uniformity in tax administration in the whole country. Now, let’s look at some of the advantages of GST registration in India.
Elements of the GST.
Taxes that are applicable under the GST includes;
– SGST (state goods and services tax) – the state government has the right to levy SGST.
– CGST (central goods and services tax) – the central government has the right to levy CGST.
– IGST (integrated goods and services tax) – the central government has the right to levy IGST on inter-state supply of goods and services.
The inception of GST has impacted the Indian economy positively. GST has torn apart the inter-state barricades that hamper trade and has forced the Indian economy to come together in a single unified market. Even traders and manufacturers both are beneficiary of the GST regime along with end consumers. GST provides numerous benefits to all the members in taxation.
Advantages of the GST.
– Minimalizes tax evasion and makes the tax administration corruption-free.
With the inception of the GST, the tax administration has become corruption-free and transparent. The problem of tax evasion diminishes the government’s revenue collection, which further hampers the nation’s growth economically. This is a remarkable disadvantage to dutiful taxpayers. To minimalize the tax evasion, several measures have been taken up by the GST authorities as given below;
– Linking the GST registration with PAN card.
– To report and match at the invoice level.
– Inception of E-way bills.
– Tracking the goods and products’ movements.
– Reconciliation of credits.
– GST commissioner’s appointment for investigation.
– Appointment of directorate general of analytics and risk management.
– Procedural advantages.
– General process to register.
– Uniform formats with marginal tax fillings.
– Understandable and transparent rules and regulations.
– Easy bookkeeping.
– Minimal revenue leakages and better collection of revenue.
– Tax refunds.
– Uniform tax base.
– Comprehensive system of classification of goods and services.
– No existence of cascading effect anymore.
Before the inception of GST, there used to be the cascading effect of taxes, which has been eliminated with the GST implementation. GST has terminated the tax-on-tax impact on goods and services. It covers all the indirect taxes within itself. It has already helped in bringing down the cost of goods and services. Hence, GST brings the uniformity of taxes which is one of the crucial advantages of it.
– Driven by technology.
The process of registration to submission of returns is driven by technology, which accelerates its fundamental aspects. It also makes sure that the process stays clean and tax collection is done legitimately. The online portal of the GST provides the following facilities;
– Refund application.
– Return submission.
– Response to notices.
– Consumer complains.
– Compliance remains less under the GST.
With the inception of GST, the numbers of distinct compliances are lesser now. Before the arrival of GST, there used to be VAT, excise and service tax, each with its compliances and deadlines. These were monthly or quarterly, relying on the nature of business. Nonetheless, online GST return filing will have a single return to be submitted. There will be 11 returns, out of which four will be basic returns that all the taxable persons are obliged to submit.
– Exemption limitations will be higher under the GST.
The GST council has raised the exemption limit for the sale of goods to Rs. 40 Lacs. For the north-eastern states, it is Rs. 20 Lacs. The exemption limit for the service providers is Rs. Twenty Lacs for all the states exempting few with the special care which has Rs. Ten Lacs.
From the 1st of April, 2019, the composition scheme’s annual turnover limit has been increased to Rs. 1.5 crores from earlier Rs. 1 crore. Taxpayers whose annual turnover is under Rs. 1 crore can avail of the composition scheme’s benefits. For the Himachal Pradesh and North-Eastern states, this limit is at Rs. 75 Lacs.
This scheme helps small taxpayers from mundane formalities of GST. Under the scheme, tax can be paid at a fixed rate on turnover. As per the CGST (amendment) act, 2018, which came into effect from 1st of February, 2019, a dealer under the scheme can supply services up to ten per cent of the annual turnover, or Rs. Five Lacs, whichever among them is higher. Also, cumulative turnover would be considered of various businesses registered under the same PAN number. Such a move can potentially benefit small businesses.
– Business operation for E-commerce businesses would be easy.
Earlier, there were many tax laws when it came to E-commerce business supplies. The delivery trucks moving from one border to another were obliged to present the required documents and VAT and registered number. Failure of which could lead to confiscation of goods. GST has eliminated all such barriers to ensure smooth and seamless transactions of goods.
GST has not only provided benefits but also brought transparency to the indirect tax regime in India. It offers numerous advantages, as we discussed above, that can help our economy to grow.