Hailed as one of the biggest tax reforms that Indian economy could have possibly seen in one generation of a lifetime – introduction of GST has received mixed reactions from different portfolios of business.
If you have missed the media coverage all through the years 2017 & 2018 – bisecting & dissecting how GST has impacted the various sectors in the economy, don’t worry- the team at Kanakkupillai will help you get a comprehensive view on our Big Brother of reforms. Before we get into the good and not so good aspects of GST, let’s quickly take a note of the various indirect taxes that got subsumed by our Big Brother- VAT, Service Tax, Sales Tax, Central Sales Tax, Central Excise Duty, Entry Tax, Local Body Taxes etc.
Hits of GST- :
- Tax Uniformity– Whether you are a businessman in Elapy or Baroda, the tax levied on your manufactured product or service will be the same. The goods & services produced thus have become competitive not just at the national but also international markets. The Modi government loves it as GST has boosted its “Make in India” campaign.
- Higher Purchasing Trends – Companies are happy with GST as lower manufacturing costs have resulted in a reduction in overall cost to end customer, thereby boosting overall purchasing trends.
- Rationalization of tax structure – simplification of compliance procedure- Separate taxes for goods and services, in the older taxation system, required division of transaction values into value of goods and services for taxation, leading to greater complications, administration, including compliances costs. In the GST system, the integration of taxes has helped split the taxation burden equitably between manufacturing and services.
- Wider tax base, lower tax rates – The average tax burden on industry and trade is expected to lower because of GST, resulting in a reduction of prices and increased consumption, which will eventually increase production and ultimately enhance the development of various industries.
- Eliminating Cascading effects of taxes- Thanks to the seamless flow of tax credit from the supplier or manufacturer to the retailer or user, the cascading effects of taxes have gone out the window.
- Regulation of Unorganised Industries – Certain unorganised and unregulated sectors in the country, such as textile and construction have become regulated with accountability. GST aims to ensure that payments and compliances are done online, and input credit can only be availed when the supplier accepts the amount, thus ensuring that these industries have regulation and accountability.
Misses of GST- :
- Increased costs due to software purchase- – Increased costs of software purchase that assists in GST filing process has led to higher operational costs for many businesses.
- Compliance: Businesses need to file returns 3 times a month for every state in which they operate translating to at least 36 filings in a year per state.
- SMEs have higher tax burden- Smaller businesses; especially in the manufacturing sector have faced difficulties under GST. Earlier, only businesses whose turnover exceeded Rs 1.5 crore had to pay excise duty. But now any business whose turnover exceeds Rs 20 lakh has to pay GST.
- An online taxation system – Unlike earlier, businesses have now been forced to move from pen and paper invoicing system to online return filing & making payments. They have also had to employ tax professionals to be GST-complaint.
Change being the only constant they say, is never easy. The government is trying to smoothen the road to GST. It is important to take a leaf from global economies that have implemented GST before us, and who overcame the teething troubles to experience the advantages of having a unified tax system and easy input credits.
The key is to be GST-compliant at any time. The team of taxation experts at Kanakkupillai can help your business get GST compliant in two easy steps.
Step 1- Call us at 7305 345 345
Step 2 – Relax & allow Kanakkupillai professionals to do the worrying bit for you!
By the way – Did you know that July 1 st is celebrated as GST Day every year in India? With the number of “Special Days” dedications ever on the rise (World Environment Day, Friendships Day, GST Day etc.), it is not long before the entire 365 day calendar will be blocked and government may need to reform/restrict these dedications to only an year per feature.
Until then Keep Reading & Keep Trending!