New to the Goods and Services Tax and GST Implementation? Here’s what you need to know

New to the Goods and Services Tax and GST Implementation? Here’s what you need to know

You are probably aware of the introduction and the implementation of the Goods and Services Tax (GST) in 2017. GST was introduced to subsume multiple taxes that existed under the previous tax structure. Some of these taxes were service tax, entertainment tax, and so on. Under the current tax structure, however, providers of goods or services are required to pay a single indirect tax.

If you are a provider of goods or services, you must carry out the GST registration process before conducting your business operations. If you find yourself slightly unsure and on the fence, check out the rest of this article to get a clearer picture.

What are the advantages of the GST Bill in India?

The GST has a wide array of advantages. Here are some of the main ones:

  • Firstly, the Goods and Services Tax subsumes the collection of indirect taxes that were levied as part of the previous tax structure. The earlier tax structure made tax calculation too tedious a process, mainly because there were different taxes imposed at the state and central levels. GST implementation has managed to solve this problem.

  • Aside from this, the GST bill has managed to nullify the cascading effect of taxes under the previous tax structure, including logistic fees, inter-state tax, production costs, and many more. Consumers would bear the brunt of the taxes under the old regime because the total sum of the service or goods in question would be exorbitant after taxes. The overall cost of goods and services has reduced after the introduction of the GST bill.

Other advantages include a composition scheme for relatively smaller businesses, defined treatment for E-commerce, and an increase in logistics efficiency.

What are the components of GST?

There are three major components of the Goods and Services Tax. These are Central Goods and Service Tax (CGST), State Goods and Service Tax (SGST) & Integrated Goods and Services Tax (IGST).

CGST

The Central Government collects the CGST for an intrastate sale. For instance, the CGST applies if a transaction takes place between two cities in Maharashtra.

SGST

The State Government collects SGST for an intrastate transaction.

IGST

The Central Government collects IGST for a transaction that takes place between different states.

What are the Disadvantages of GST?

Here are some demerits of the GST system in India:

An Increase in costs due to software purchase

With the new tax system in place, businesses will be required to either update their current account software to become compliant with the GST rules or purchase a GST software altogether. In either case, companies will need to invest additional capital in updating their software and training their employees to use it correctly.

A boost in operational costs

Considering the confusion that has come with the implementation of GST, companies will have to get tax professionals onboard to ensure they remain GST-compliant, and in turn, stay in business without hassle. In other words, this is another expense they will have to bear.

GST Identification Number

A Goods and Services Tax Identification Number (GSTIN) is a unique 15 digit number exclusive to every business. Under the GST regime, every business is required to register for a GSTIN. This number will prove to be vital when you file your GST returns. In addition to this, having a GSTIN ensures complete transparency of every transaction that takes place, thereby making tax evasion highly unlikely.

Here’s why you will have to register for a GSTIN:

  • A GSTIN will help you broaden your market and reach out to them by allowing you to conduct inter-state sales. Furthermore, if you E-commerce is a part of your plan, you will have to get a GSTIN for your business.

  • Registering for a GST number can greatly simplify the process of claiming your Input Tax Credit. If you pay your taxes on time without malpractice, you can expect to receive income tax returns on your payments. Of course, you will have to ensure you enter the correct GSTIN to avoid any issues.

Finally, registering for a GSTIN will help you come across as a credible business, which is critical if you wish to do well in the market.

Category Featured

Multimag Comments

We love comments
No Comments Yet! You can be first to comment this post!