What is GST?
GST is one of the topics which has been discussed everywhere from parliaments to the local tea stalls,But a clear conclusion of it has not been discussed everywhere, so this blog will contain some relevent information which everone should know.
GST which is an abbrivation of Goods and Service Tax, it is an indirect tax which has a moto of one nation one tax, it is a single tax which has eliminated many indirect taxes in India and is levied on the purchase and sale of goods and services.
In India goods and service tax was introduced on 1st JULY 2017 and more than 160 countries are using the concept of GST. It is one of the common tax all around the world, This is a tax which helps the central and state government to distribute thier tax earning without any disputes.
As goods and service tax is one of the biggest tax reforms for the country this change is been opposed by many. This tax is levied for simplifying the taxes in the country as India has adopted dual GST model.
There are some procedures for being a part of this new indirect tax empire, firstly the tax payer need to appy for its GST number after that the monthly or quaterly return filing starts.
TYPES OF GST
Central Goods and Service Tax, which is the revenue of central government.
State Goods and Service Tax, which is the revenue of state government.
Integrated Goods and Service Tax, is used when there is inter state transaction.
There are four tax rates of GST those are 5%, 12%, 18%, 24% . The rates of GST is decided jointly by central and state government. This tax removes the double taxation on the consumers by which the prices of the products and services will subsicuently decrease, The tax creadit facility will allow to remove the cascading effect.
- Eliminating Cascading Effect :-
Cascading effect is tax on tax, This tax helps in eleminating the double taxation on tax by providing credit for the tax paid and by creating an understanding between central and state government.
- Common Tax
As goods and service tax is a centralized tax system and with that the government is trying to equilize the taxes all over the country. One country one tax, no discrimination in states.
- Slimplifying Tax Regime
One of the main focus of goods and service tax implementation is to simplify the complex tax regime in our country, The previous taxes were a bit tricky to understand for a common tax payers and hence they started to shift towards digital filing and payment of taxes.
- Composition Scheme for Small Scale Businesses
This new tax system has a composition scheme which means that if they opt for this scheme then they dont need to calculate tax and file return quaterly, they can just simply pay tax at a fix rate every year. This will further simplify tax obligations and procedures for the small scale businessmen.
- Increase in Faith of Taxpayers
The tax payers and the experts know the benifits of the change and they have supported this tax system from the very first day of it’s implementation, Even there is an increase in tax payers after it’s implementation.
- A Long Run Concept
This tax system may not look effective in its initial days as the change in system will take some time to settle down all the parties from the government to the the consumers, But as soon as the system settles it will be benifitial for government, taxpayers and the consumers as well.
- Control on Tax Evasions
In older tax syatem there are some loops which has been manupulated by many, they had created a chain of tax evasion which has subsiquently broken by this tax system and from now they have to show the sales just because the other party needs a tax creadit of it.
- Decrease in Inflation
The new tax system has layed a procedure which will cut of double taxation and cascading effect subsiquently, this will reduce the prices of the products and will help in reducing the rate of inflation.
- Increase in Initial Cost for Government
The purchase or development of new software, training employees, changing the working system all these task need a huge investment initially, this change is costly and its one of the major disadvantage of it.
- Lack of Digital Awareness among Tax Payers
Not every tax payer has digital knowledge and due to this he may or may not br able to understand all the online procedures related to GST return filing and payment.
- Change is not Easy
The change sounds easy but its never that easy, conveincing everyone for a change and at the country level is one of the difficult task. So even when everything is planned the execution may not be smooth.
- New Registrations
After the implementation one aspect that really troubled the comon tax payers is to get registered on a new act, Government tried to make it easier by way of using online modes but havent worked that well.
The above discussion has revieled some of the basic advantages and disadvantages of GST. This can be a new era of Indian tax system as the phase “One Tax One Nation” is found true and relevent with the change in indirect tax system. The challenges will always be there but this step will make things improve accordingly.
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