10 Things You Should Know About Good and Service Tax
On 1 July 2017, the eye of Indian was on their TV sets as the new structure of taxation – Goods and Services Tax (GST) system was effective in the country. Now, the phrase “one country, one tax, and one market” is right.
According to Arun Jaitley, the finance minister of India, the goods and services will be different five categories which include 0%, 5%, 12%, 18% and 28%. He also added that India’s GDP will benefit significantly. No doubt, it will have an impact on the normal man’s life.
Here are 10 things you should know in GST:
- PAY JUST ONLY ONE TAX
The key tax credit introduced is a significant feature of this. The end user will have to just pay the GST by the last end in the supply chain. Previously, there are lots of taxes such as Service Tax, Value Added Tax, Entertainment Tax, Excise Tax & much more.
- ADVANTAGE FROM TAX REDUCTION
Due to the input tax credit, the service providers and even goods manufacturers are now capable of passing advantages to the end customer. The advantage of tax reduction is directly given to the buyer. Government creates the Anti-Profiting Team to deliver the benefit of such cost to the ultimate consumer. Previously, Traders was not able to get the benefit of input tax credit of Excise duty due to not having the registration under Excise. Hence, it increases the cost for the trader.
- ALCOHOL, PETROL not included in GST
One can sigh relievingly as items such as petrol, diesel, and aviation turbine fuel has been not included of GST. State Government remain to have the right on Petrol, Diesel, Alcohol etc to levy the tax as value added tax & Excise on such goods. The government still charged a high rate of tax on such items.
- BURDEN TO DECREASE WITH TIME
According to the Reserve Bank of India (RBI), the latest monetary policy statement will not be affected by Goods & Service Tax. Surely, the burden of the tax will disappear with time. A government is trying a lot to reduce the cost to the consumer as well as reduce the burden of time for the dealer & manufacturer.
- SERVICE FIELD TO BE AFFECTED
An inflationary short-term blow of GST will be noticed definitely on the service sector as the tax rate will increase to 18%. With time, however, it is hoped that due to decreased cost due to the accessibility of GST credit on items that have not been accessible up till now, prices will come down significantly, thus benefitting clients. In the meanwhile, Consumer has to bear the extra burden of 3 percent or more in the service sector due to the roll out of GST.
- BETTER DEVELOPED COSTS
It is quite potential that companies will surely wait for a few weeks to make sure how the net crash of GST has affected them and also advertise of wholesalers and distributors. The opportunity for manufacturers revising their costs will affect the customers later. However, Trader & manufacturer need to pay the lots of costs for developing the software as well as for maintaining the record.
- EFFECT ON STOCK MARKET
There have been a lot of highs lately in the time from statement to the execution of GST. The domestic markets, particularly, are looking at execution of GST with some companies hitting newer highs in their store cost in this financial year. According to the analysts that markets need some time to regulate to the GST execution process.
- HUGE BENEFITS FOR SMALL BUSINESSES
The small level industries who earn less than Rs. 20 lakh in a year will be excused from the GST. If you have an annual turnover of not exceeding of Rs. 75 Lakh, then they have the option to opt composition Scheme to avoid maintaining the books of account for getting input tax credit. The manufacturer will have to pay 2% rate of tax for opting composition scheme, Supplier relates to food and any other articles for human consumption or any drink will have to pay 5 % tax (it excludes alcoholic liquor) & any other suppliers will have to pay 1% tax.
- SIMPLE TO DO BUSINESS
GST will be changing a number of taxes, interfaces, and compliances into one rule. This would be a huge benefit for those doing their personal businesses. It reduces multiple compliances, maintaining cost, understanding multiple laws & tax etc. Hence, It will help to do business in a single roof.
- INTEREST ON TAX PAYABLE
In the Goods & Service Tax regime, Person has to pay the interest on late payment on the amount of total output tax for the month. A person is also not allowed to file the return for the next month if he did not file a return for their previous month. Previously, interest on late payment of tax would be levy on the tax amount not in the total output tax which was comes on the sales (Turnover) amount. The GST is supposed to be a structural reform that is not simply transformational for our economy, but also helpful in numerous ways – formation of an improved national market; simplicity of performing doing business.
The GST is supposed to be a structural reform that is not simply transformational for our economy, but also helpful in numerous ways – formation of an improved national market; simplicity of performing doing business.