Birth of Goods and Services Tax
Tracing back to the year 2014 when the Modi Government took charge of the Indian Economy at large, there is an immense change in the outlook of the country till now with few major initiatives like Make in India, Swachh Bharat Abhigyaan, Jan Dhan Yojna, various other reforms and policies benefitting the nation.
The two biggest changemakers that took India on fire was Demonetisation and Goods and Services Tax or GST.
Now what is GST, is the first question that I had as a common man running a business for the first time?
So in a layman’s language, GST means indirect taxes replacing various direct taxes levied in India.
Goods and Services Tax brought into force on the 1st of July 2017, is aimed at to be a simplified version of taxes levied on national, state and local levels.
Under a single Goods and Services Tax is a spectrum of indirect taxes like the Central Excise Duty, VAT, Entry Tax and the Purchase Tax operated by the Central and State governments.
GST though being a new implication routes its existence from the year 2000 during the governance of Vajpayee as the Prime Minister.
Below is the journey of GST from its start to being processed and then finally took 17 years for implementation.
GST in India following the concept of one nation one tax has raised the bar of expectations of people regarding the GST system, but on the run has its own share of advantages and disadvantages.
Let’s delve a little more into the journey of GST so far in gaining a stand-in India.
From manufacturing to wholesalers to retailers and finally the end customers is how products are routed. In this process, it is the end customer who bears the burden of GST and then the manufacturers and retailers can claim the GST.
Also, the government has fixed GST rates slab for various commodities.
Post-implementation GST in India has its own share of ups and downs, with the government taking all efforts to make it feasible and seamless to the people of India.
Few Advantages of GST
- GST was mainly implemented to get down the cost of goods which were priced higher due to the effect of taxes on various levels.
- Also, the government digitized the business processes and compliances system by introducing GSTN for a smooth integration of transactions.
- The process of GST registration has been made easier and efficient with the help of technology wherein everything can be done online.
- The main criteria being to cut down the excess burden of indirect taxes at various levels.
- Prior to GST there were certain tax compliances applicable to e-commerce sites in the transportation of their goods, but with GST this has been made easier as the taxes are universally applicable anywhere in India.
- The competence of the logistics industry has improved as they don’t have to bear the state wise cost and CST.
- The unorganized sectors have been streamlined with GST due to the online structure of payments.
Few Disadvantages of GST
- Introduction of GSTN faced a few hurdles like frequent system failures and postponement of due dates to deposit GST.
- The export companies especially the textile industry faced a lot of glitches due to the slow down of the payment in the Integrated GST (IGST). This mainly retarded the growth of the export industry.
- GST also affected the claim of input tax. As there is a three-stagereturn filing process by the GST council, due to certain mismatches companies are questioning whether the claim for credit input tax will be disputed by the tax officials.
- Due to GST, especially the Small and Medium-sized industries have to bear extra operation costs in hiring expert tax consultants for understanding and functioning of GST.
Putting aside these pros and cons, the GST Council is working hard towards the betterment of GST rules in India for simplifying the process to various businesses.
To understand GST better and to know more about GST compliances, how it works I felt the need to consult tax experts. There are various financial consulting companies, but Aavana Corporate Solutions being one of them with a cutting edge in offering services not only what you approach for, but a gamut of them related to financial functioning for the benefit of your organization.