The Goods and Service Tax is one of the greatest tax reform in India since independence. GST has been levied on both goods and services. GST has subsumed all the indirect taxes like VAT, Excise, Service tax etc. GST will affect every business irrespective of its size. The benefits of GST are common in many cases, but they are different for a different class of people.
The advantages of GST for traders and manufacturers are as follows:
After the coming of GST, all central and state government taxes have been subsumed under one tax i.e. Goods and Service Tax GST. It has resulted in removing the cascading effect of other 16 Central and State Taxes. Trade barriers will come to cease with the implementation of GST.
Earlier, goods were sold within the state in order to avoid paying Central Sales Tax (CST). This Central Sales Tax (CST) is not credited at the time of manufacturing or course of trading of goods. There will be a common single market if there will be no CST and entry tax. The products of good quality which are being manufactured in one part of the country will be able to find more customers as compared to the goods which are manufactured in the farthest part of the country because there will be no Central Sales Tax (CST) and entry tax.
In some cases, goods and services are treated separately. With the coming of GST, all controversies related to the difference have been eliminated.
With the elimination of entry tax, it will be a great boon for the movement of goods by road. From the records, it has been reported that India’s long line of vehicles carrying good is taxed around 60 percent of the time. This leads to delaying of goods at destinations.
Earlier, the invoices were detailed since there were many taxes written separately for one transaction. But with the implementation of GST, only one rate will be written in the invoices.
Before, there were fewer exemptions given by Centre and State Government due to which the final price became different. With the implementation of GST, there is only one single tax which is followed throughout the nation and there will be no such exemptions for charging different prices in different states.
It is a highly complicated concept as it is defined by the Supreme Court and High Court. This concept remains mostly under the controversies. From now the concept of manufacture will be replaced by the concept of value added which is measurable and not controversial.
Note: Controversies related to classification will be abolished.
Under GST, Input Tax will cover any goods or services used by the company if the business gets extended, which will widen the ambit of input GST credits. This will result in removing the requirement for establishing the direct nexus of input or input services with the final product or service provided by the company. The unavailability of credit towards excise duty, VAT on goods and service tax on certain services in the earlier tax regime added to the cost of running a business. This will be avoided under GST when there is an increase in credits for e-commerce operators and sellers.
According to the previous tax law, tax authorities could refuse for a refund of higher duty of tax paid in case the burden of a higher rate of tax which is already been imposed have not been passed on to the customers. This law needed to be abolished. Under GST the taxation system of goods and services will have a seamless movement.
GST composition scheme allows taxpayers to inform the tax authorities about the intention behind registering under this scheme and it is available for all registered taxpayer. If a taxpayer fails to register under the GST scheme, he/she will be categorized as a normal taxpayer and administered accordingly. This option is for all businesses i.e. both for goods as well as services. Registered taxpayers whose aggregate turnover is less than Rs. 50 Lakhs in the preceding Financial Year are liable to pay tax at a rate more than 1% for the manufacturer, 2.5% in case of restaurant sector and 0.5% for the suppliers of turnover.