Much-anticipated Goods And Services Tax will be in action by 2017 and businesses have started to prepare for this "One-India" process. Although, the transition process has started but has many challenges that businesses are facing at the moment. The transition process is huge and will need a mass change in the business taxation process. Also, the businesses have many doubts with the Income Tax Return process that will be affected by this transition.
The first thing roaming in business's mind is the uncertainty of the process and current situation. Many of the questions are yet to be cleared out such as the minimum limit or the type of goods. The final nodes are yet to come from the governmental authority and that has affected the Goods And Services Tax registration process a lot. The scenario is, businesses are aware of the base idea, but are just making mare guesses for the whole mechanism.
Also, getting registered under this umbrella is not the only thing, but businesses need to change their whole accounting system to work compatibly under this scheme. Also, Income Tax Return filing will also affect by this system, as going digital will be the one part of this system. This system will introduce a multi-layer tax structure for the businesses, such as 5%, 12%, 18% and 28% depending on the different commodities they are dealing with.
Though it has been popularized with the "one-nation-one-tax" slogan, but Goods And Services Tax is not the same in real. The central GST structure and state GST structure will be much different which contradict this famous slogan. Also, there will be a huge change in the goods importing and exporting taxation structure. The current tax structure is origin based while the new system will introduce a destination based taxation system. This will affect the business's Income Tax Return process and amount hugely.