GST (Goods and service tax) is an indirect sales or transaction tax that is levied when goods are bought and sold. As the name suggests it is applied to everything that is traded including services. It was the biggest tax reform since it was introduced on 29th March 2017 and brought into effect on 1st July 2017. Indeed, it is one nation, one tax that has replaced many indirect taxes and brought a uniform taxation system across the country.
India has adopted a dual GST system i.e. central GST and State GST. Central GST tax replaces central excise tax, additional excise duty, service tax, additional customs duty, special additional duty of customs, etc. whereas; state GST tax replaces Sales Tax/Value Added Tax (VAT), Entertainment Tax, Central Sales Tax (CST), Purchase Tax, Luxury Tax, Taxes on Lottery, Betting & Gambling, etc.
There are 5 GST laws in India i.e. central GST, state GST, union territory GST, integrated GST, and Goods and services (compensation to state) law. Central GST manages and collects CGST on products and services whereas state/union territories collect taxes at the state level. Under the 101st constitutional amendment, central and states/union territories could simultaneously impose taxes on goods and services. Coordinated GST manages taxes on import/export of goods between two states and union territories. Further, IGST is the tax levied under the judgment of both the Center and states.
• Dynamic tax
• Single indirect tax across the country
• Dual GST, CGST & SGST
• Comprehensive Tax On the trade of goods and services
• Value Addition Tax at Each Stage
• Free Flow of Credit
The GST law brought benefits for both; traders and the economy. It helps industries better control their working capital and enables greater cash flow. Besides, there are several other benefits of GST.
Before GST, there were several separate taxes compliances i.e., service tax or excise returns, VAT that had to be paid every month or every four months. But since the GST has been introduced, taxpayers have to comply or file return for only one law.
GST unifies several central and state taxes into a single tax system, which leads to a uniform tax rate and structure across the country. This has reduced the taxes burden thereby reducing the net market price of products and services.
GST law enables creditable tax input, which means traders/businesses/industries can subtract the tax that is levied on their inputs from the total payable taxes. This significantly reduces the tax burden on taxpayers.
With growing digitalization in the system, GST is promoting transparent and corrupt-free business. Further, one tax system across the country and a robust IT structure make GST return filing easy and transparent.
Under a single tax system, the tax burden on goods transported from one state to another has been reduced as the recipient of the goods got the credit of tax. In this case, traders don’t need to set up their warehouse in each state, instead, they can transport their goods across the country operating from fewer locations.
With one nation and one tax, industries are getting more benefits. They are meeting their compliance and payment provisions with ease, thereby getting better organized and regulated.
Since GST regulations came onto the scene, businesses, manufacturers and traders are facing several issues regarding tax calculations,updates, reforms & amendments, return filing, etc. Though the new system is much better than the earlier fragmented tax system, it has brought in new challenges and complications. Premium GST software has always been helpful in such scenarios. They minimize GST complications to a great extent. In fact, they provide complete solutions for business and service firms to comply with GST rules and undergo tax calculations. They are useful in Audit, error-free tax return filing, GST billing, data archiving & protection, and more.
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