ALL Basic information about GST
Good and service tax is the comprehensive indirect tax which has been changed most of the indirect taxes in India. GST act was accepted in Parliament on 29th March 2017 and it came into the process on 1st July 2017.
Goods and Services Law in India is the multi-state, comprehensive and destination based tax which is levied on each value addition. GST mainly remove cascading effect on the sale of goods and service. As everyone knows removal of the cascading effect might directly impact the cost of goods.
The cost of the goods must decrease since the tax could be eliminated in this regime. It is technologically driven and all activities like application for refund, registration, return filing and response to the notice must be done through online on GST portal which can speed up the process.
There are 3 taxes are applicable under this system like SGST (collected by State Government on intra state sale), CGST (collected by Central Government on intra state sale) and IGST (collected by Central Government for inter-state sale).
Excellent advantages of GST
When it comes to the indirect taxes in pre-GST regime then it includes central excise duty, additional duties of excise, the special additional duty of customs, central sales tax, luxury tax and entertainment tax. Huge numbers of the benefits are associated with the GST such as
- Eliminates cascading effects of the tax
- Higher threshold for registration
- Number of the compliances is lesser
- Easy and simple online procedure
- Composition scheme for small business
- Defined treatment for the ecommerce operators
- Unorganized sector is regulated under GST
- Improved efficiency of the logistics
In pre-GST, it was seen that certain kinds of industries in India like textile and construction were largely unorganized and unregulated. Traders and business with annual sales about 20 lakhs are legally responsible for paying gst. The government says that gst might boost revenue in coming years.
Earlier to the gst regime, supplying goods via ecommerce sector might not be defined and it had different kinds of VAT laws. GST is the uniform tax that could be implemented across the nation. One of the main benefits of the gst is that intra state business could be cheaper. Tax burden on the logistics will reduce.
Everything to know about GST
For the government, GST is boon which was long coming. The first benefits could be easier administration especially all indirect taxes are replaced by the gst. GST is collected on value added services at each stage of the purchase in supply chain. Amazing numbers of the advantages are involved in the gst like
- Tax structure could be simple and lean.
- Entire Indian market will be combined market that might translate into the lower business costs. It might facilitate seamless movements of the goods across States and minimize transaction cost of the business.
- It is the best choice for export oriented business because it could not be applied for goods that are exported out of India.
- In the long run, lower tax burden might translate into the lower prices on the goods for clients.
- Number of the department will reduce that might lead to the less corruption.
Effective ways to calculate GST
The first step in calculating gst is that find out gst rate applicable for goods or services under gst act. In order to figure out gst rate, you must create the distinction between the types of supply supplied. In case the supply is good, it is always necessary to interpolate with HSN code application for good.
HSN code is the international system to classify all kinds of the goods in international transactions. Suppose the transaction involves supply of the service then SAC code should to check for finding relevant SAC code to the service. Once you successfully know about gst rate then the applicability of the CGST or IGST and SGST should be determined. In most of the cases place of supply services or goods will be address where goods could be delivered was offered. Check supplier enrolled under GST composition scheme.
Finally, decide the kind of the transaction and under gst, it could be specified under three categories like business to business, business to users (worth of supply less than 2.5 lakhs) and business to users (value of supply more than 2.5 lakhs).
The entire process of the gst is made in online which could be beneficial to start up company. In GST system, all taxes could be integrated so it might create possible taxation burden to be spilt justifiably between services and manufacturing. If you gather all the information about GST then you will come to know about the importance of GST in India. The GST implementation has faced both pros and cons, but many of the average business people affected badly.