I have listed about 10 changes which may happen on introduction of Goods and Service Tax (GST) in India. Hope this helps.
Answerable to two departments – Presently, those who are providing services have to file returns with Service Tax department and those who are selling goods have to file returns with State VAT department. So, those who are exclusively providing service are answerable to Service Tax department and those who are exclusively selling goods are answerable to VAT department. Upon introduction of GST, they have to deal with two Departments, State GST (maybe the present VAT department) and Central GST (maybe the present Service Tax department).
Answerable to only two departments – Presently, those who are manufacturing and selling goods have to file returns with Central Excise department, Service Tax department and State VAT department. Upon introduction of GST, they needn’t visit multiple offices. They are answerable to only two departments i.e., State GST and Central GST.
Tax anomaly on sale of food will go – Today, sale of food in restaurant will attract VAT at 14.5% on 100% of the bill value and Service Tax at 12.36% on 40% of the bill value. Which means on a bill of Rs.100, you will pay taxes on Rs.140. This ridiculous way of taxing will go away. You will have SGST and CGST, that’s it.
Tax on marriage halls and contention centre – Today, if you rent a hall you will have to pay Luxury Tax and Service Tax. Going forward, there won’t be luxury tax and in its place you will find SGST. Similarly, in the place of Service Tax you will find CGST.
Sale and maintenance of Software – Today, software is the worst hit product due to the tug of war between VAT and Service Tax (ST) department. ST wants to tax on sale of software, right to use, etc and VAT wants to tax on sale of software considering it as goods. In the process, the software companies are charging the customers VAT as well as ST. This confusion will go away.
Works contract – This is another area of confusion. Complying to VAT and ST provisions are more taxing than executing works contract.
Multiple Due Dates – Today you will have to pay ST or Excise Duty on 6th, VAT on 20th, monthly returns for VAT, Half yearly returns for ST, etc. On conversance of all these Acts into GST, hopefully we will have a common due date for SGST and CGST
Check posts – The ‘Scope’ and ‘role’ of check posts will drastically come down. The delay inmovement of goods, long queues in front of check posts may become history.
Services may become expensive – The services may become expensive due to increase in GST rates (assuming GST at 20% and the same rates are kept for pure services)
10. Goods may become cheaper – Contrarily, the goods may become cheaper due to reduction in the overall tax liability (today, VAT and Excise duty together will be over 26%) and set off of input tax.
Arpit Shah, you did a good work about Goods and Services Tax in India. SAG Infotech is trying to assume all guidelines into an upcoming GST Software India. Actually, I am a little bit confuse about your 4th point (Tax on marriage halls and contention center).
GST Software in India facilitates and provides solution for n number of problems related to different criteria and domains. There are software which make life and business very easy through their unique features.