What is GST? Goods and services tax (GST) is a value-added tax levied on most domestic-consumption goods and services sold. Consumers pay the GST but the firms supplying the products and services remit it to the state. In turn, GST provides the Government with revenue. Check What is GST council and Its functions below.
What is the GST Council?
The GST Council is an apex member committee designed to amend, replace or obtain any legislation or policy focused on the goods and services tax sense in India. The GST council is headed by union finance minister Nirmala Sitharaman assisted by India’s states’ entire finance minister.
Read More – How to Invest in Share Market Online
Functions of the GST Council:
It is tasked with the duties of making important GST decisions and improvements. The GST Council is allowed to evaluate the tax rate available under the GST model, the tax exemption regulations, the due date for submission of GST forms, tax-related laws and deadlines and special exemptions for certain Indian states
When was GST Introduced?
GST was first suggested by Mr. Atal Bihari Bajpayee in the year 2000. The State Finance Minister formed an empowered committee to create a structure for GST. The GST was launched at midnight on 1st July 2017 by the President of India, and the Government of India.
What are the types of GST?
Based on the sort of transaction, there are four forms of GST, viz. Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST), Integrated Goods and Services Tax (IGST), and Union Territory Goods and Services Tax (UTGST).
How is GST Calculated?
The taxpayer should be aware of the GST rate applied to various groups when measuring GST. … The measurement of GST can be demonstrated by a simple illustration: if the products or services are priced at Rs 1,000 and the effective GST rate is 18%, the estimated net price is = 1,000 + (1,000X(18/100)) = 1,000 + 180= 1180.
Advantages of GST:
GST removes the Cascading Impact of Tax
GST is a holistic indirect tax intended to eradicate the indirect taxes. Most specifically, the cascading impact of the tax which was apparent earlier would be removed.
Higher Threshold for Registration
Earlier, any company that had a turnover of more than Rs 5 lakh (in most states) was liable to pay VAT in the VAT system. Please note this cap varies from state to state. Service tax for service suppliers with a turnover of less than Rs 10 lakh was also removed. Nevertheless, under the GST system, this threshold was raised to Rs 20 lakh which exempts many small traders and service providers.
Small Business Composition Scheme
Under GST, small companies (with a turnover of Rs 20 to 75 lakh) will benefit from using the Composition scheme because it provides an opportunity to reduce taxes. The change has high the cost of tax and enforcement on many small companies.
The Online Method is Quick and Fast.
Everything of the GST process (from registration to filing returns) is handled online, so it’s super easy. This has been of special advantage to start-ups, as they do not have to travel from pillar to post to get various approvals such as VAT, excise and sales tax.
Established Care for Operators of E-Commerce.
Earlier to the GST rule there was no concept of selling goods through the e-commerce market. It had variable VAT laws.
Must Read – How to Calculate the Income Tax
Disadvantages of GST:
Increased Costs Due To Software Purchase.
Businesses must either upgrade their current GST-compliant accounting or ERP software or buy a GST program to keep their business running. Yet all the solutions lead to an additional cost of purchasing equipment and educating staff to use the new billing program effectively.
Being GST-compliant
Small and medium-sized businesses (SMEs) that have not yet registered for GST must understand the complexities of the GST tax regime fast. They will be expected to submit GST-complaint invoices, comply with automated record-keeping, and file timely returns of course. This ensures that the GST-complaint invoice issued must include mandatory information such as GSTIN, place of distribution, HSN codes and others.
GST Will Mean An Increase in Operational Costs
As we have already known that GST affects the way taxes are charged, companies will now have to hire tax practitioners to worry about GST. This will raise expenses for small companies slowly, because
GST is an Online Taxation System:
Unlike before, the firms are now moving from invoicing and reporting pen and paper to electronic return filing and payment. This may be hard for some smaller companies to adapt to.
The Tax Load On SMEs Would be Higher:
Smaller businesses would face difficulties under GST, especially in the manufacturing sector. Before, only businesses whose revenue reached Rs 1.5 crore were expected to pay excise duty. But any company whose revenue is greater than Rs 20 lakh will now have to pay GST.
Krishna Murthy is the senior publisher at Trickyfinance. Krishna Murthy was one of the brilliant students during his college days. He completed his education in MBA (Master of Business Administration), and he is currently managing the all workload for sharing the best banking information over the internet. The main purpose of starting Tricky Finance is to provide all the precious information related to businesses and the banks to his readers.
