GST is an
indirect tax in India, which has replaced many other indirect taxes. The GST tax India
was passed in the parliament on 29th March 2017 and the act came
into force on 1st July 2017. The Goods and Services Tax law of India
is comprehensive, multi-staged and destination based. In other words, GTS is an
indirect tax which is there on every supply of goods and services. This
particular law has replaced every other indirect tax law which has previously
existed in India.
GST is one
indirect tax which is for the entire country. Under it, the tax will be there
at every point of sale. Interstate sales taxes will be apt as integrated GST.
The journey of GST began in the year 2000 when a committee was set up to draft
an indirect tax law. It took almost 17 years for the law to evolve. All
registered business has to file GST return
online monthly, quarterly or annually depending on
the type of business.
Why is the
GST is Destination based? Suppose if some goods are in West Bengal and are sold
to the final costumer in Tamil Nadu, since GST is there only at the point of
consumption, in this case, it is Tamil Nadu, and the entire tax revenue will go
to the Tamil Nadu government and not West Bengal government.
A GST returns
online is a document that contains details of income which a
taxpayer should file with the tax filing authorities. This is vital for the tax
authorities to calculate the tax liability. Under the GST, a professionally
registered dealer has to file the GST return which includes, purchase, sales,
output GST and the input tax credit i.e. GST paid on purchases. To file a GST
return, a GST compliant purchase and sales invoices are necessary.
Advantages
of GST in India
One tax
system- instead of paying several taxes which are there in the state and the
central government, GST proposes to impose only one indirect tax. GST will
replace several hidden taxes that are there at the state and central
governments. This will definitely improve the business.
The decrease
in price of commodities- GST has the charge at the manufacturing time and
collected at the point of sale; this means that the price will come down which
in return will benefit the consumer. Once the price goes down, the purchasing
power of the consumers will increase, hence it will benefit the company.
Product
identification- under the earlier regime, the classification of commodities
into different categories caused a lot of confusion and was a litigious issue.
GST aims to solve the issue by bringing in HSN or Harmonized System of
Nomenclature. It is actually an 8 digit code used to identify commodities
according to international standards.
Eliminating
extra taxes- earlier several taxes are on the same product hence increasing the
price of the product. With the passing of GST, it has eliminated the tax on tax
effect.
