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GST Consultants in Kumara Park West
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Goods and Services Tax (GST) is an indirect tax reform which aims to remove tax barriers between states and create a single market. For that to happen the constitution first needs to be amended to remove different layers of governments' exclusive powers to levy taxes.
How will GST help?
Goods and Services Tax (GST) is an indirect tax reform which aims to remove tax barriers between states and create a single market. For that to happen the constitution first needs to be amended to remove different layers of governments' exclusive powers to levy taxes. Once this step is taken, the tax barriers between states, and centre and states will disappear.
How will it help consumers?
In GST, consumers should benefit in two ways.
First, all taxes will be collected at the point of consumption. It means that if a shirt is taxed at 18%, it will include both central government's taxes and state government's taxes. Transparency in taxation should deter governments from indiscriminately increasing taxes as there is bound to be public backlash.
Second, once barriers between states are removed, we as consumers will not end up paying "tax on tax" which is what happens when goods move across state borders.
Taking a cue from international best tax practices, and to ease out the complications and compliances under different indirect taxation laws and different statutory authorities, thought process was started to consolidate number of taxes in to one system of taxation uniformly across the county.
The GST is going to be of following types.
1. SGST (State GST) - to be collected by the State Government
2. CGST (Central GST) - to be collected by the Central Government
3. IGST (Integrated GST) - to be collected by the Central Government.
What is the applicable GST rate?
The rate (percentage) of GST is not yet decided. As mentioned in the above table, there might be CGST, SGST and Integrated GST rates. It is also widely believed that there will be 2 or 3 rates based on the importance of goods. Like, the rates can be lower for essential goods and could be high for precious/luxury items.
Benefits of GST Bill implementation
1. The tax structure will be made lean and simple
2. The entire Indian market will be a unified market which may translate into lower business costs. It can facilitate seamless movement of goods across states and reduce the transaction costs of businesses.
3. It is good for export oriented businesses. Because it is not applied for goods/services which are exported out of India.
4. In the long run, the lower tax burden could translate into lower prices on goods for consumers.
5. The Suppliers, manufacturers, wholesalers and retailers are able to recover GST incurred on input costs as tax credits. This reduces the cost of doing business, thus enabling fairer prices for consumers.
6. It can bring more transparency and better compliance.
7. Number of departments (tax departments) will reduce which in turn may lead to less corruption
8. More business entities will come under the tax system thus widening the tax base. This may lead to better and more tax revenue collections.
9.Companies which are under unorganized sector will come under tax regime.