Benefits of GST

There cannot be a better way to celebrate India’s independence. The dream to have GST in India may soon be a reality now. The month of August once again became historic after August of 1947 when India attained independence from British Raj. August 2016 created a historic achievement once again as India march ahead on the road to fiscal freedom on tax front as 122nd Constitutional Amendment has been approved by both the houses of Indian Parliament i.e, on 3rd August 2016 by Rajya Sabha (upper house) and on 8th August, 2016 by Lok Sabha (lower house). What a gift to Indian citizens and businessmen in 70th year of Independence.

Goods and Services Tax (GST)

GST is one indirect tax for the whole nation, which will make India one unified common market. GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.

Benefits of GST

The benefits of GST accruing to various stake holders can be summarized as under:

For business and industry

1. Easy compliance: A robust and comprehensive IT system would be the foundation of the GST regime in India. Therefore, all tax payer services such as registrations, returns, payments, etc. would be available to the taxpayers online, which would make compliance easy and transparent.

2. Uniformity of tax rates and structures: GST will ensure that indirect tax rates and structures are common across the country, thereby increasing certainty and ease of doing business. In other words, GST would make doing business in the country tax neutral, irrespective of the choice of place of doing business.

3. Removal of cascading: A system of seamless tax-credits throughout the value-chain, and across boundaries of States, would ensure that there is minimal cascading of taxes. This would reduce hidden costs of doing business.

4. Improved competitiveness: Reduction in transaction costs of doing business would eventually lead to an improved competitiveness for the trade and industry.

5. Gain to manufacturers and exporters: The subsuming of major Central and State taxes in GST, complete and comprehensive set-off of input goods and services and phasing out of Central Sales Tax (CST) would reduce the cost of locally manufactured goods and services. This will increase the competitiveness of Indian goods and services in the international market and give boost to Indian exports. The uniformity in tax rates and procedures across the country will also go a long way in reducing the compliance cost.

Are You Prepared For GST?

Preparedness for GST in next few months will involve Tax Planning Review, Transactions Review, Training Manpower, Cost Effectiveness in Inventory, logistics & Final goods, business Planning with anticipation of new tax structure with competition, Fastest Implementation & Transition to GST, Procurement and Purchase Orders Implementation, Invoicing Patterns, Proper Implementation of GST Transition in input stage credit, tax management versus business operations, various misc provisions, etc.

One has to take all steps to ensure that no dispute arises during transition and thereafter. If precautions and safeguards are not taken, well in time, during the pre and post implementation period of GST regime, then the possibility of litigation, due to ignorance and/ or non implementation, cannot be ruled out.

The nation is on the cusp of executing one of the most ambitious and remarkable  tax reforms in its independent history. Implementing a new tax, encompassing  both goods and services, to be implemented by the Centre, 29 States and 2 Union  Territories, in a large and complex federal system, via a constitutional amendment  requiring broad political consensus, affecting potentially 2-2.5 million tax entities,  and marshalling the latest technology to use and improve tax implementation capability, is perhaps unprecedented in modern global tax history. The time is ripe to collectively seize this historic opportunity.

- See more at: http://taxguru.in/goods-and-service-tax/freedom-multiple-taxes-gst-regime.html#sthash.fYgynT1p.dpuf