BENEFITS OF GST (GOODS & SERVICES TAX)
GST is proposed to be a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level. It will replace all indirect taxes levied on goods and services by the Indian Central and state governments.
GST is a win-win situation for the entire country. It brings benefits to all the stakeholders of industry, government and the consumer. It will lower the cost of goods and services, give a boost to the economy and make the products and services globally competitive. GST aims to make India a common market with common tax rates and procedures. It will remove the economic barriers thus paving the way for an integrated economy at the national level.
Some benefits of GST to State/Central Government
Removing cascading effect
An important benefit of the introduction of GST will be the removal of the cascading effect. 'Cascading tax effect' means a tax on tax.
Under the current regime, the service tax paid on input services cannot be set off against output VAT. Under GST, the input tax credit can be availed smoothly across the spectrum of goods and services, thus reducing the tax burden on the end user and removing cascading effect.
Transparency in tax laws
GST will bring more transparency to indirect tax laws. Since the whole supply chain will be taxed at every stage with credit of taxes paid at the previous stage being available for set off at the next stage of supply, the economics and tax value of supplies will be easily distinguishable. This will help the industry to take credit and the government to verify the correctness of taxes paid and the consumer to know the exact amount of taxes paid.
Higher threshold for registration
As per the current VAT structure, any business with a turnover of more than Rs. 5 lakh is liable to pay VAT and for service tax, service providers with turnover less than Rs. 10 lakhs are exempted but under GST threshold limit has been increased to Rs. 20 lakhs.
Simpler online procedure under GST
The entire GST process ; starting from registration to filing returns and payment of GST tax is online which means that companies does not have to go to government offices every time. GST is largely technology driven. It will reduce the human interface to a great extent and this would lead to speedy decisions.
Lesser number of compliances
Before GST Excise, VAT and service tax have their own returns and compliances. GST will unify all these, thereby reducing the number of returns and the time spent for tax compliances.
Regulating the unorganized sector
Certain industries as Real estate and textile are largely unregulated and unorganised.GST has provisions for online compliances and availing of input credit only when the supplier has accepted the amount, which brings accountability and regulation to these industries.
There are some benefits to the Indian Citizen such as simpler tax system, Reduction in prices of goods and services due to elimination of cascading, uniform prices throughout the country, Transparency in taxation system and Increase in employment opportunity.
GST aimed at increasing the taxpayer base by bringing SMEs and the unorganized sector under its compliance. This will make the Indian market more stable than before and Indian companies can compete with foreign companies. However, there are some some challenges such as implementation issues, infrastructure issues, tax payers are not well informed etc but once GST is implemented all these challenges will be of past as there are more benefits of GST.
The above information in this article is derived from the following website:
- Press information bureau(pib.nic.in)