In order to reform the indirect taxation in India, the government has introduced the Goods and Services Tax (GST) which will merge several Central and State taxes into a single tax and help avoid cascading or double taxation. The list of taxes that will be amalgamated under GST are:
- Central Excise Duty
- Service Tax
- Countervailing Duty
- Special Countervailing Duty
- Value Added Tax (VAT)
- Central Sales Tax (CST)
- Entertainment Tax
- Entry Tax
- Purchase Tax
- Luxury Tax
- Advertisement taxes
- Taxes applicable on lotteries
Here are five important things you need to know about GST:
Is your business liable to pay GST?
As a business owner, it is important for you to understand if your business is liable to pay GST. The GST Act specifies that tax will be levied whenever there is a ‘supply’ of goods or services. It need not be a sale and can also be transfer, exchange, barter, lease, etc. of goods or services. If your business is involved in any of the above, then GST is expected to replace all the taxes paid by you on purchases. The government may exempt some goods and/or services from GST which will notified to people.
How many types of GST do I have to pay?
GST has been introduced in an attempt to minimize the number of taxes paid by people. However, the Center and State Governments can levy GST for a supply made. The first step is to understand if your business has made an intra-state or an inter-state supply. Although it is self-explanatory, an inter-state supply is one where the origin state is different from the destination state. It is compulsory for business making inter-state supplies to register for GST. It is also known as a destination-based tax and the supplies are likely to be taxed at the tax-rate of the destination state. Intra-state sales may attract Central and State levy, called SGST and CGST. And inter-state sales may attract IGST, which is likely to be a sum total of CGST and SGST. IGST may also be levied on imports.
Should I prepare for GST?
All businesses which are already registered under Excise duty or VAT or Service Tax have to register for GST. The government has exempted businesses with a turnover of less than Rs. 20 lakh [Rs. 10 lakh for North East States] from registering for GST. However, this exemption is not valid for businesses involved in inter-state transactions. GST is mandatory for businesses making inter-state supplies. Website owners involved in supply of goods and services have to mandatorily register for GST too.
Benefits of GST
GST can benefit everyone.
- Intra-state business is expected to become cheaper. There will be a reduced burden of tax on logistics and a uniform tax across all states will make business seamless.
- GST can transform India into a standardized national market making it easier for international companies to do business.
- It will be easier for the government to administer the taxes as most indirect taxes will be replaced by GST.
- A better coordination can be expected between the Center and the State since management of multiple taxes will be avoided.
- Companies will receive a relief in tax due to GST which if passed on to the end consumer can bring down the prices of goods and services.
- All hidden taxes will be uprooted and people can expect transparency in the supply chain.
Proposed returns filing procedures under GST
- Filing of returns under the GST law would be possible only through online mode. You would be able to prepare the returns offline but the same will have to be uploaded to file them.
- There will be a common e-return for CGST, SGST, IGST and Additional Tax.
- Filing GST returns would be possible by the tax payer or his/her authorized representative.
- There would be no revision of Returns. Changes to be done in subsequent Returns
Source: Economic Times & http://www.gstindiaonline.com/
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.