Tag: advantages of gst

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Business motivation

How To Let Goods And Services Tax Play To Its Strength To Support And Grow Your Business

goods and service tax

The moment Goods And Services Tax was introduced back in 2017, it was met with mixed reaction from the nation. GST made some huge changes in the form of removal of VAT, excise, and service tax by absorbing them all in it and bringing down the overall cost of goods and services of a product. We all know nothing great has been ever achieved without a few challenges here and there and the same happened with GST reform as well.

Nonetheless, gradually GST has proven its mettle and convinced all of us that it is doing way more good than causing incontinence. In this article, we will be discussing the various benefits GST offers that can end up being in the favour of your business.

Convenience With Filing Returns

Earlier businesses, especially businesses that belonged to the MSME sector, used to face a lot of difficulty in tracking the number of taxes there were back such as excise duty, VAT, purchase tax, luxury tax, etc. Things were so complicated that a normal businessman without great knowledge in this domain would end struggling and hire an expert to crunch those numbers. Since GST has been introduced, filing returns has become easier than ever as businesses now have to take care of just 1 tax that has subsumed all other taxes. 

Shipping Made Super Easy

With so many tax checks and different kinds of taxes, while shipping goods from one place to another, the process was extremely inefficient as it would increase the cost of transportation in terms of fuel and time.  The process was made much easier when the government removed the border checkpoints from the process when GST was introduced. Now with GST, the shipping has not only been made efficient but has been made less time consuming than ever.

Canopy Of Technology

There is a reason why technology is said to your best friend these days. With the help and backing of technology, many businesses are now getting to enjoy a much more convenient way to deal with their taxes. Yes, we are talking about the GST online portal. This online portal has made the process extremely easy where you are just required to get GSTIN to pay your taxes every month. Also, you need not worry about keeping all the paperwork safe, because it is automatically getting saved for you in your personal account. Amazing, isn’t it?

Put An End On Cascading Tax Effect

The Biggest relief and joy GST has brought into the lives of business owners and consumers is the elimination of the cascading Tax Effect. Cascading tax effect is the concept where good is taxed on each and every step of its creation which sums up to be a huge amount of burden, which the consumer bears in the end. GST put an end to this by introducing Input Tax Credit. ITC allows you to subtract the GST you paid to your vendors from the amount you owe to the government.

Sure, the GST might take you a bit to get familiar with, as it involves a great deal of technology and digitization, you will only thank the government later to have introduced this in the first place. 

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Business motivation

GST: Types Of Goods And Services Tax And Different GST Rates Across The Nation

In the simplest of words, GST can be defined as the value-added tax that is levied on the goods as well as services which are sold indigenously. GST is the expense that is taken care of by the end consumer and is ultimately remitted to the government by the businesses that sold the goods to the end consumers.

Now, there are basically 4 kinds of GST which we are listing below

  • The Central Goods and Services Tax (CGST)
  • The State Goods and Services Tax (SGST)
  • The Union Territory Goods and Services Tax (UTGST)
  • The Integrated Goods and Services Tax (IGST)

Central Goods And Services Tax (CGST)

CGST is the tax that is levied by the central government on the transactions of Goods And Services that take place within the same starters, which is Intrastate transactions. The Tax is levied along with the other two taxes known as SGST. Please note that the revenue that is collected in the form of GST on intrastate transactions is shared equally between the state government and the central government. 

State Goods And Services Tax (SGST)

Let’s now try and understand what SGST is. SGST is the tax levied by the state government over the transaction of the goods that are manufactured and sold within the same state. This Tax is levied along with CGST.

Union Territory Goods and Services Tax (UTGST)

UGST could be defined the same way as SGST, only it is applicable in the union territories. The only aim to introduce Union Territory tax is to provide the same benefits to all the businesses in a union territory that a business would enjoy in any state. The UTGST is applicable to five Union Territories namely Lakshadweep, Daman and Diu, Dadra and Nagar Haveli, Andaman and Nicobar Islands, and Chandigarh.

Integrated Goods and Services Tax (IGST)

Now, this one is a bit different from others as it deals with the transaction of goods and services between two states. If any good or service is transacted from one state to another, there is a tax that will be levied on those transactions and it is called the Integrated Goods and Services Tax. IGST is also applied to goods and services that are imported and then distributed among various states.

Rates Of GST

There is a slab proposed by the government which is divided into 4 categories of GST rates applied to various kinds of goods and services. The rates are 5%, 12%, 18%, and 28%.

  • 5% GST is for the goods that are included are the day-to-day household items like kitchen essentials such as sugar, spices, tea, coffee, edible oil, etc.
  • 12% GST would be applied to goods such as computers and processed foods are included like cheese, ghee, ayurvedic medicines, cell phones, and fertilizers, etc. Services like work contracts, business-class air tickets
  • 18% GST will be applied to products like jams, sauces, soups, ice cream, instant food mixes, mineral water, tissues, envelopes, tampons, notebook, steel products, printed circuits, camera, etc.
  • 28% of GST will be applied to various luxurious items.

It is important for each and everyone, be it a consumer or a businessman, to understand the concept of GST inside out in order to make the entire process more convenient with everybody being on the same page. We hope this article was of some help to enhance your information on various kinds of GST and the different rates that vary with the category. 

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Business motivation

GST: What Is Goods And Services Tax And What Are The Benefits It Offers?

The change that is now recognized as one of the biggest reforms made in India that changed the entire game of how and what taxes are paid. Yes, We are talking about GST, goods and services tax, that includes many indirect taxes which were imposed by the central government such as excise, VAT, and service tax. GST has helped the MSME sector a lot by simplifying the process of filing returns, hence, decreasing their dependence on the experts who used to help them earlier with filing their taxes.

Components of GST
  • State Goods and Services Tax (SGST): Tax levied by the State Government
  • Central Goods and Services Tax (CGST): Tax collected by the central government
  • Integrated Goods and Services Tax (IGST): Tax applicable on inter-State supply of goods and services by the central government

There are many such benefits and advantages that GST offers, and anybody who is an aware and responsible citizen of India should know about it as it affects not only the entrepreneurs but the customer as well. Some of the main benefits are

Technical Advantage It Offers

The best thing about the introduction of GST is the technology that is involved in the process which is playing to its strengths. It is now way easier to register and to file the returns. There is an online GST portal that will help you with

  • Registration
  • Return filing
  • Application for refund
  • Response to notices
  • Consumer grievances

Uniformity In Taxes

Earlier, when GST was not in existence, there were several other taxes that unintentionally increased the cost of goods and services. However, GST has not absorbed all these taxes such as VAT, Excise, and service tax to rescue the cascading effect they had on the entire process. GST has brought that uniformity that much required and has ultimately resulted in the reduction of the total cost.

The Composition Scheme

GST offers a composition scheme under which small businesses that have a turnover of up to 75 lakhs can benefit by lowering their taxes by making the required changes. This has helped so many businesses with the unnecessary burden of tax and compliance.

Higher Threshold

According to this very beneficial reform, businesses that have a turnover of up to Rs. 20 Lakhs will be exempted from paying the GST. Earlier, with VAT, businesses that had a turnover of more than Rs 5 lakhs had to pay this tax. This change is speaking for the evident relaxation that has been provided to small businesses.

These are only a few of the many changes that were brought into existence to ease up the burden on the needy and to bring transparency in the whole system, Sure, which reform of this magnitude, there were some difficulties that were introduced, but the number and magnitude of the positives it brought can any day overweight the negatives.