GST A Driver of Growth Engine for the Nation
What is GST ?
GST is basically an indirect tax that brings most of the taxes imposed on various goods and services at the point of manufacture, sale and consumption of goods and services under one umbrella at the National level. While in Pre GST Era, taxes were levied separately on Goods and Services. GST has been envisaged as a more efficient tax system. Below are the benefits of GST :
i) Simplification in Tax System:
Pre GST Era, Central Taxes like Central Excise Duty, Special Additional Custom Duty (SAD), Additional Custom Duty (CVD), Additional Excise Duty, Service Tax, Taxes on lottery, betting and gambling. State Taxes like VAT/ sales Tax, Entertainment Tax, Luxury Tax, Entry Tax in place of octroi, Electricity duty. All above various taxes under Central Government are now subsumed in CGST and While State taxes are now subsumed in SGST.
ii) Record Keeping :
With introduction of GST, various records / formats need not to be maintained to make a compliance under various Acts & Laws like in the Pre GST regime. It result in saving of time / paper work and Staff member will devote their time on some other important activity from Organisation perspective. iii) Elimination of Multiplicity of Taxes and their cascading effects : One of the Key benefit from GST is removal of the cascading tax effect. In simple words removal of Tax on Tax. Below example shows the net saving from cascading tax effect. Cascading effect while calculating VAT(an indirect tax) is levied not only on the product value but also on the Excise Duty (as an indirect tax). Main advantage from nullifying cascading effect is saving in Cash flows and lower burden on net landed price to the ultimate customer. iv) Gain to Logistic Company : Logistic companies in India have maintained multiple warehouses across state to avoid CST & local taxes on inter-state movement of goods. Occupancy of warehouses, most of the time, is idle and leads to unnecessary burden of increased cost. With introduction of GST various taxes are abolished and hence efficiency of logistic Company would definitely increase due to abolition of entry tax post. India’s logistics sector would gain the most from the goods and services tax as the cost would fall by almost 20%. (Ref.: Economic Times of India as said by Hon. Road and Transport Minister). v) Scheme for Small Business : Composition Scheme is introduced for small businessmen whose turnover is less than Rs.75 lacs. For them GST is optional and they will pay very lower tax as compare to prevailing tax rates. vi) Online Procedure : Starting from Registration to filing the returns as well as payment of taxes is online. It helps entire process to be faster, accurate and hassle free. vii) Unorganised Sector: GST’s main focus is on increasing the taxpayer base by bringing SMEs and the unorganized sector under its purview. This will make the Indian market more competitive than before. Conclusion : The Whole Success of GST depends upon effective implementation to the extent of Retailer in business chain. No doubt that GST will help to make our Nation to become more competitive in the business world as compared to the other countries. Recommended Articles
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