Benefits of GST
Category : Tax Issues
Why GST is needed?
Experts have already said that implementation of GST is the biggest single reform in India post independence.Many a times the initiative has been taken for its implementation but it could not be matured due to lack of unanimity amongst the states.
GST will be applicable both for goods and services.Implementation of GST will subsume all the indirect taxes like excise duty,CST,VAT and Service Tax.
Benefits of GST:
- Removal of cascading effect is going to happen due to implementation of GST soon.Cascading effect means taxes on tax.Under the current taxation scenario some of the taxes paid on inputs can not be set off against the output taxes.This thing generally increases the cost;
- Equivalent limit for GST Registration.This means trader of goods or services have to get itself registered under GST Law for a turnover of ₹20 lakhs. Earlier it was ₹1.5 Crores,₹10 lakhs and ₹5 lakhs for Excise,Service Tax and VAT respectively. Thus, many small dealers would not come under its purview;
- Like the present taxation system GST law has also brought in the “Composition Scheme”.It would definitely help the small businesses having turnover ranging between ₹20 lakhs to 50 lakhs.This scheme is certainly going to ggive a great sigh of relieve to the small businesses.
- Unlike the current tax regime GST has made the return submission procedure much simpler and lesser tax compliant.There are a total 11 nos. of return under GST Law but 4 nos. of basic compulsory returns for all the dealers.This will definitely bring down the cost to the every dealers who have a pay a hefty amount for filing various returns for various periods during a fiscal year;
- Great benefits to the logistic industries. Presently, the logistic industry has to maintain different warehouses across the states to cut the taxes like CST and Entry Tax which led them to run their go downs under capacity and thus increased operating cost. But the implementation of GST has made this process much simpler and has allowed the logistic industries to set up their warehouses in strategic points across the states reducing number of taxable transactions so that they can cut down their operating cost and great opportunity for the economy;
- One of the most important feature of GST is that “One nation one Tax”. In current global scenario it has been much needed for India to prevail one taxation structure in one country across the states. GST has subsumed the practice of having multiple taxation rates for same products or services across the states.Thus , bringing greater transparency amongst the tax payers which would definitely help the Govt. exchequer.
- Further, the GST regime would help the local manufacturers of India to compete with foreign competitors like China,Korea, Taiwan and many more to a great extent;
- Last but not the least the G.O.I has estimated the implementation of GST from 1st July 2017 would provide Indian economy a boosting of 2 to 2.5% of the GDP;
I would conclude with saying that every new thing has some drawbacks too and GST is not very much different to that.GST also has got some inherent limitations lying with its characteristics.