GST, or the Goods and Service Tax, is an indirect tax levied on the supply of goods and services within India. A GST number example would be 22AAAAA0000A1Z5.
GST subsumes the multiple indirect taxes (such as Luxury Tax, Entry Tax, Central Excise, Purchase Tax and Value Added Tax) being levied by the Central Government or the State Governments.
The benefits of GST reach the citizens, and the utility of GST for the industries and the government of India far surpasses the taxation of pre-GST times. Implementation of GST is seen as a way to decrease the price of services and goods and to boost the economy. GST is expected to make Indian services and products competitive internationally.
Uniformity of Taxation
GST will create a common national market and integrated economy through uniform tax rates and removal of economic barriers. This will bring about ‘One nation, one tax’ as well as provide a boost to the ‘Make in India’ campaign of the Government.
Providing Buoyancy to Government Revenue
It is forecasted that GST will aid in providing buoyancy to Government Revenue through tax base expansion and increased compliance of the taxpayer. It should help put India on a better ranking on the index for Ease of Doing Business. It is expected to bring GDP enhancement between 1.5% to 2%.
Cascading of Taxes
The GST will prevent cascading of taxes by providing the entire supply chain with a mechanism of an all-inclusive input tax credit. At every stage of supply for all products or services, there can be streamlining of business operations with seamless access to the input tax credit.
Simpler and Lesser Number of Compliances
With laws, procedures and tax rates harmonized, compliance is easier. There will be a rise in efficiency due to a single GST portal with everything like formats and definitions being common. Inter-state disputes, such as on entry tax, will be of no concern. A transaction will not face multiple taxations. All of this will reduce the cost of compliance.
VAT and service tax will merge under GST, decreasing both times invested in tax compliance and the number of returns that need to be filed. While there could be a rise in the number of returns, three of the four returns are automatically populated.
Regulation of Unorganised Industries
Certain sectors in the country, such as textile and construction, are unregulated. GST will force the highly unorganised sectors to become compliant and also make payments online. Input credit will be available to them when the amount is accepted by the supplier. This will ensure accountability and regulation.
Under the composition scheme, a business with a turnover between INR 20 lakh and INR Rs.50 lakh shall pay lower taxes.
Not just to business and the Government, the utility of GST is for the common man and the economy, too.
Benefits to the Common Man
- Many products and/or services have 5% or lower tax or are tax exempt.
- Fewer exemptions.
- Tax structure simplification.
- Free movement of products and services between states.
- Consumers benefited by rising competition between businesses and manufacturers.
- Lower rates on several items, such as washing machines and televisions.
Benefits to the Economy
- Common unified market.
- Increased manufacturing processes.
- Increased investments and exports.
- Increase in jobs.