Everything You Need to Know About GST and its Benefits

You must have come across the term GST or Goods and Services Tax. Have you really caught what it’s all about? This line is going to help you understand the concept behind this line and help you understand what it is all about. To learn more about the gst registration, click here!

What is GST?

GST is a form of indirect tax, very similar to how service tax or VAT are indirect taxes. It aims to unify the Indian market and act as a single line for the entire country. GST is applicable on supply of all goods and services from the manufacturer to the consumer. It will provide a system for tax crediting of all taxes paid at each stage and thus the taxation of value addition at each stage. At the last stage of acquiring any goods or services the consumer is obliged to pay the taxes collected by the dealer before him and can get set for all other taxes paid earlier.

GST is being implemented in India with an objective to standardize the tax structure, which is clearly carried through the tagline “One Tax for One Country”.

A breakdown of GST is recommended

IGST – stands for Integrated GST. It will be imposed and administered by the Center on every inter-state goods and services.

CGST – stands for Central GST. It is levied by the Center on intra-State supply of goods and/or services.

SGST – refers to the state GST and is levied by the states on goods and services.

Benefits of GST to Indian Economy

The benefits of GST will reach different customers in different ways. Let’s look at these benefits from a personal perspective.

Benefits for businesses

  1. Business and consumers, in general, will find it easier to comply with the requirements of the taxation system as it will be supported by a complete IT system. It will provide all the services like registration, filing of return and payment of tax through online mode. In this way, one can implement the procedures of GST in an easy manner.
  2. Doing business activities across the country will become a neutral process. A common tax rate system allows people to start and run a business anywhere.
  3. This taxation system eliminates the layered effect of the tax and, thus, reduces the hidden costs of doing business.
  4. Reducing tax rates and a consistency across them will lead to increased competition across businesses.

Benefits to Governments

  1. So far, the federal and state governments have been managing a number of indirect taxes, all of which have a number of rules and regulations that must be complied with and verified. Now, with a uniform tax rate and system across the country, with the support of an efficient information technology system, the task of managing the taxation system will be simplified.
  2. A thorough testing and commitment to the lines and constant monitoring with information technology systems will ensure that non-compliance with the lines is easily caught.
  3. It is also expected that the cost of tax collection will be significantly reduced due to the online taxation system. As a result, there will be higher revenue collection from the government.

Benefits to the end consumer

  1. Today, there are many goods and services in the country that are fraught with the cost of hidden taxes. With a single taxation system and availability of input tax credit at every stage, there can be transparency in the prices of goods.
  2. The overall tax burden on most goods will be significantly reduced.

Benefits for SME / MSME

  1. The total income of the taxpayers is Rs. 250 crore with a tax rate of 25%, and a turnover of Rs. 250 crore tax rate of 30% is payable.
  2. All taxpayers eligible for entry exemption will have the option to pay tax with Input Tax Credit (ITC) concessions.
  3. SMEs in the service sector do not get any exemptions or concessions. Offers are limited to SME manufacturers. The total tax incidence on every product we manufacture in India is between 27 to 31%, which should come down to 20%.
  4. Rs. SMEs with a turnover of up to Rs 1.5 crore were exempted from excise, but VAT / CST / entry tax was levied under state law. Exemption does not mean that small and medium full 1.5 crore is exempted from excise duty.

What are the current taxes included in GST?

(i) Central taxes treated as one under GST:

  1. Central Excise
  2. Excise duties (medical and toilet products)
  3. Excise Additional Duties (Special Importance Items)
  4. Excise Additional Duties (Textile and Textile Products) 4 5
  5. Additional Duties of Customs (commonly known as CVT)
  6. Special Customs Duty (SAT)
  7. Service tax
  8. Federal surcharges and chess are so far related to the way they provide goods and services

(ii) below the state taxes subject to GST:

  1. State VAT
  2. Central Sales Tax
  3. Luxury tax
  4. Entry Tax (All Forms)
  5. Recreation and entertainment tax (except when levied by local authorities)
  6. Tax on advertisements
  7. Purchase tax
  8. Tax on lotteries, betting and gambling
  9. State Surcharge and Cess related to supply of goods and services

How does the government plan to manage GST?

Since India has a federal system, GST will be administered at two levels, the central and state levels. GST is levied on supply of all goods and services. Cross utilization of input tax credit is not allowed and input tax credit of respective phase is allowed to be set off from that phase itself. However, cross-application of Central GST will be allowed on goods and services, which will be allowed for State Administration GST.

Key features of the proposed payment system under GST

The complete system of GST will be governed by the following aspects:

  • Fully electronic system
  • The single point of the interface for the Sallan generation
  • Online methods for taxes
  • General Challan
  • General set of approved banks
  • Common accounting codes

Return the filing under the GST system

  • Central and state taxes have a common income.
  • In total, eight forms have been prepared for the purpose of filing taxes in the GST system. However, for the purpose of an average user, only four of them will need to be used, including products, purchases, monthly income and annual revenue.
  • Small taxpayers have an option to file quarterly returns under the Composite Scheme
  • The procedure for filing income will be done in full through the online method.

How to register under the new GST system?

  • For existing VAT, federal excise and service tax vendors, there is no need to apply for a new registration.
  • However, for new dealers who have not registered before, there will be an application form that must be filed. It is based on the person’s PAN and serves federal and state level purposes. Within three days of approval, each dealer will receive a unique GST ID.

Convenience for taxpayers

In order to cater to the needs of taxpayers who are not IT enthusiasts, the following facilities should be available: –

  • Tax Revenue Maker (DRP):
  1. A taxable person can prepare his registration application / return himself or approach TRP for assistance.
  2. TRP will return the specified registration document / in the prescribed format based on the information provided to him by the taxable person.
  3. The legal responsibility for the accuracy of information contained in the forms prepared by the DRP 38 38 39 rests solely with the taxable person and the TRP shall not be liable for any errors or misinformation.
  • Facility Center (FC)
  1. Responsible for the digitalization and / or uploading of forms and documents, including abstract sheets, duly signed by an authorized signatory and issued by the taxable person.
  2. After uploading the data on the common portal using FC’s ID and password, the FC of approval will be taken by FC and signed and handed over to the taxable person for his or her records.
  3. The FC will scan and upload the abstract sheet signed by the authorized signatory