If you are unaware, the Goods and Services Tax (GST) is a single unified tax levied by the central government on the goods and services you purchase. The objective of the GST implementation was to subsume the indirect taxes under the previous tax structure that caused double taxation or a cascading effect. There are three types of taxes that you need to be concerned with. Integrated GST (IGST) is a tax you have to pay the central government to supply goods or services to different states. Central GST (CGST) is a tax you will have to pay to the center for making supplies within the same state. State GST (SGST) is also levied on intra-state supplies, but this tax goes to the state government.
Benefits of the Goods and Services Tax (GST)
There are a variety of benefits that GST has to offer. Consolidating indirect taxes into one, thereby getting the consumer to pay one tax instead of several taxes at different stages, is one advantage of the Goods and Services Tax. GST’s implementation promises to help the country in the long-run. Here are the primary benefits of GST:
Minimizes Tax Leakages And Corruption
The taxpayer can sign, make tax payments, and file returns using the GST portal online without having to deal with the authorities. The GST portal has an extensive database that is up-to-date with all your details once you submit them. Additionally, a system like this prevents tax evasion and fraud.
Elimination of Layered Taxes
As mentioned earlier, GST is a unified tax that incorporates various taxes like Utility Tax, Central Excise, Income Tax, Separate Extra Customs Duty, Luxury Tax, and so on. It does not allow the imposition of different tax strata on taxable goods and services.
Making a Common Market For The Country
The Goods and Services Tax has managed to boost the GDP tax ratio, which is instrumental in fostering economic productivity and sustainable development in the long-term. GST contributed to the common tax law regarding indirect taxes for a variety of industries. It plays a key role in eliminating economic distortions and forms a common market for the entire country.
Regulation of the Unorganized Sector
GST came up with rules to make unorganized and unregulated markets transparent. Examples of such markets include construction and fabric.
Resourceful And Efficient Administration
Indirect taxes have always been difficult to handle. However, with the GST in place, a unified tax and a consolidated GST network with easy access to data makes it simple for the government to manage tax payments and other related data.
Running Of Business is much easier
With the GST in place, there are no issues with the enforcement of the indirect tax. Back then, businesses would face the brunt of VAT licensing, interacting with tax authorities, excise regulations, and much more. However, now, businesses have a much easier time running and functioning, thanks to GST.
Decline In Litigation
The Goods and Service Tax aims to minimize lawsuits as there is now clarity regarding tax authority between the state and the central governments, which is how GST ensures there is a seamless evaluation of tax.
Elimination of Cascading Effect Of Taxes
As per the GST policy, the overall price on the products and services bought is payable by the customer. Nonetheless, there will be an import tax credit system in place to ensure revenues do not decline. GST shall only be imposed on the value of the goods or services in question.
Increase in logistics productivity
Back then, there was a lot of confusion regarding the rules and regulations on logistics, which was why inter-state supplies and transactions were challenging. As a result of amorphous rules on logistics, businesses would suffer from having to pay too many indirect taxes levied at different points during supply and production. Fortunately, this is not the case with GST. Registering your business for a Goods and Services Tax Identification Number (GSTIN) will cement your E-commerce and inter-state supplies.