Whether you’re new in business or a veteran on the market, it’s impossible not to have heard of the new tax system that will be rolled out this year in India, called Goods and Services tax, for short GST.
With the promise of streamlining the current tax structure, the government will integrate all current indirect taxes into a single GST tax, making tax collection more transparent.
All invoices from B2B transactions have to be captured and compared to the corresponding party’s records. If there are any discorcondances, input tax credit cannot be claimed.
Implementation will be tough on businesses as they will have to learn on the go. Returns need to be made more often and cash flow might have suffer. GST software will be the key in their day to day operations.
While logistics will get easier for companies that sell goods, businesses in the service sector will suffer more. Currently, service providers need to register once at the central level while GST will require registration in every state such a business operates.
No more tax cascading and applying tax at the total value of the product on each stage of the supply chain. Tax will be applied to value addition at each stage and businesses will be able to claim input tax credit.
Taxes for both Centre and State will be collected at the point of sale and charged only on the manufacturing cost. As prices are likely to come down, consumption will increase, resulting in more production and helping businesses grow.
Interstate movement of goods will get easier. All businesses that need to move goods around the country currently need to keep multiple warehouses in order to reduce tax prices. This won’t be necessary as GST will remove entry state taxes.
GST, short for Goods and Services tax, is a new tax that will be imposed on the sale and purchase of goods and services in India. GST is meant to replace all taxes in India with a single unified tax applied to value addition instead of the total value of the product at each stage in the supply chain.
This method provides credit for the input tax paid on the purchase of goods and services, which can be offset with the tax to be paid on the supply of goods and services. As a result, this reduces the overall manufacturing cost, with the end customer paying less.Read More
With certain current taxes remaining, the following goods and services will be fully or partially exempted from the GSTRead More
Free movement of goods: Business owners will be able to sell more in other states without having to worry about interstate transaction costs. With GST, the entry tax will be eliminated, which will save time and money spent.Read More
Currently, there are many indirect taxes that both the state and central governments are collecting on every purchase and sale.Read More
One of the main reasons for GST being introduced in India is the tax burden that falls both on companies and consumers. With the current tax system, there are multiple taxes added at each stage of the supply chain, without taking credit for taxes paid at previous stages. As a result, the end cost of the product does not clearly show the actual cost of the product and how much tax was applied. This cascading structure is too complex and inefficient.Read More
For inter-state transactions, the Centre will levy Integrated GST (IGST), which is equal to the average of the CGST and SGST rates. After applying IGST, CGST and SGST credits received from purchases, the seller will then pay the remaining IGST on the added value.Read More
Businesses with turnover revenue of 20 lakhs and above will have to register and file for GST returns, with a threshold of 10 lakhs for businesses in the north east and hill states.Read More
Impact of GST on your company’s working capital
The GST system that will hit the market in less than 3 months will impact millions of businesses in India ...Read More
What’s the difference between GST and VAT
VAT is a consumption tax levied on a product at each stage of the supply chain where the value of the product has been increased ...Read More