Benefits of GST for Traders of Goods and Services

There is no entry tax

The elimination of entry tax has been a great boon for the movement of goods by road. Before GST, India's long lines of vehicles carrying goods were held up at check-posts for a large share of their transit time, delaying goods at destinations. With entry tax gone and the e-way bill replacing physical check-posts, transit times have come down sharply.

Invoicing is simpler

Earlier, the invoices were detailed since there were many taxes written separately for one transaction. With the implementation of GST, only the GST rate is written in the invoices (shown as CGST and SGST for intra-state supplies, or IGST for inter-state supplies).

Exemptions under central and state government

Before, differing exemptions given by the centre and state governments meant the final price of the same product varied from state to state. With the implementation of GST, there is one single tax followed throughout the nation, and uniform rates mean no more differing prices across states on account of tax.

The concept of manufacture is abolished

"Manufacture" was a highly complicated concept, repeatedly litigated up to the Supreme Court and High Courts. Under GST, the concept of manufacture has been replaced by the concept of supply and value added, which is measurable and not controversial.

Note: Controversies related to classification will be abolished.

The increase in credits

Under GST, input tax credit covers any goods or services used in the course or furtherance of business, which has widened the ambit of input GST credits. This removed the requirement of establishing a direct nexus of inputs or input services with the final product or service provided by the company. The unavailability of credit of 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 is avoided under GST, with broader credits for e-commerce operators and sellers as well.

Undue enrichment law has gone

According to the previous tax law, tax authorities could refuse a refund of higher duty or tax paid where the burden of the higher rate of tax had not been passed on to the customers. Under GST, refunds follow a streamlined online process (Form RFD-01), giving the taxation system of goods and services seamless movement.

Composition scheme for small business

GST composition scheme allows taxpayers to inform the tax authorities about the intention of registering under this scheme, and it is available to eligible registered taxpayers. If a taxpayer does not opt for the scheme, he/she is categorised as a normal taxpayer and administered accordingly. Registered taxpayers whose aggregate turnover is up to Rs. 1.5 crore in the preceding financial year (Rs. 75 lakh for special category states) are liable to pay tax at 1% of turnover for manufacturers and traders and 5% for restaurants; service providers with turnover up to Rs. 50 lakh can opt for a similar scheme at 6%.