A Key Note On Expected Benefits Of GST

The GST was introduced in India in 2017 to revamp the indirect tax structure in India. Since then, the government has laid emphasis on the numerous benefits of GST in India. However, to understand the expected benefits of GST, it is crucial to know basic details about what GST is, the benefits of GST registration, and much more. Here is all you need to know about India’s Good and Services Act and its expected benefits.

What Is GST or Goods and Service Tax?

Goods and Service Tax, or GST, is a kind of indirect tax. An indirect tax is a tax whose burden can be shifted to the consumer. The Government of India and the states have been tasked with implementing the GST across the different spheres and sectors in India. 

Apart from being an indirect tax, the GST is also a multi-stage tax. This means that GST is applied at every stage of value addition in the supply of goods or services. For instance, consider the manufacturing of a shoe. Here, the GST will be levied across different stages of production, including the purchase of raw materials, manufacturing the laces, assembling, stitching of the shoe, etc. 

GST is also known as a destination-based tax. So, the inter-state import of materials will also be liable for the payment of GST. Here, one party receives the tax and the other pays for it. For instance, if you are a purchaser from Karnataka and decide to purchase cotton from Madhya Pradesh, you will have to pay the GST to Madhya Pradesh, and it will receive the GST amount from Karnataka via you. 

Objectives of GST

Here are some of the objectives for the implementation of GST:

• It aims to achieve One Nation, One Tax across India.
• It aims to unify the taxation process across state and union territories through GST. 
• It substitutes for all other types of indirect taxes that were there earlier. 
• It seeks to avoid tax evasion. 
• The government has issued GST to alleviate and set a standard threshold for the tax base in India. 

These are the objectives set in India regarding the GST system of taxation. In addition to this, the government in India has also listed some expected benefits of GST in India.

Expected Benefits Of GST In India

The GST system of taxation has revolutionised the taxation process in India. There are several benefits of GST that are being expected in India. Some of these include:

Uniformity 

Earlier, India had varied types of indirect taxes across states as well as the central level. In addition to this, the rate for the collection of these indirect taxes also differed across states. The government introduced GST to mitigate this variation. In the process of varied tax collection, the amount often remained unpaid or even missed. With the introduction of GST, the percentage of indirect taxation is now the same across India. 

Benefits small businesses 

Small businesses can avail the most benefits of GST. Through the composition scheme, small businesses can lower their taxation amount. Under the composition scheme, small businesses can avoid the enormous formalities of taxation. They can pay the tax at a fixed rate per their total sales. However, this scheme can only be opted by small businesses whose turnover is less than 1.5 crores.

Simple registration process

There are numerous benefits of GST registration for a business. Registering for GST taxation is easy and only requires appropriate documentation. Any startup, including the unorganised sector, can come under the umbrella of GST, and pay the only required tax amount. Moreover, the registration for GST has also been enabled online. 

Decreased compliance procedures

Before the GST taxation, other indirect taxes, such as VAT, had different rates for return and compliances. Such taxes also vary across states. Some states needed a return based on a particular threshold, while some just needed a monthly return. However, with GST, all procedures have been made uniform. There are only 11 returns in GST, which are the same for all the states. Amongst these 11 returns, 4 basic returns are applicable to every taxable entity under GST. 

Conclusion

With GST, the process of taxation has become more secure, accessible and recordable. So far, it has been beneficial in simplifying collecting indirect taxes in India. The GST taxation has simplified the registration process as well as provided various benefits of GST registration. To bring down the cases of lack of tax payments and other relevant issues, the government has also set stringent guidelines. These guidelines ensure that the taxes are paid on time.