Simple Guidance for You in GST Software
Goods and Services Tax applied on the acquisition of goods and services can be set off against that payable on the supply of goods or services. The producer or wholesaler or retailer will pay the applicable Goods and Services Tax rate but will claim back through tax credit scheme. On being the end customer in the supply chain, the end consumer has to withstand this tax and so, in many aspects, GST is like a last-point retail tax. This tax is been collected at point of Sale.
Supply Chain of GST with Example
The present tax structure does not let a business person to accepts tax credits.This may set to change with the implementation of GST. This system will have two components which will be known as
- Central Goods and Service Tax(CGST)
- State Goods and Service Tax(SGST).
The current taxes like Excise duties, service tax, custom duty etc will be merged under CGST. The taxes like sales, entertainment, VAT and other state taxes will be included in SGST.
GST will be collected on the place of consumption of Goods and services.
It can be levied on
- Intra-state supply and consumption of goods and services.
- Inter-state movement of goods.
- Import of Goods and Services.
Benefits of Goods and Services Tax
- The tax system will be made transparent and simple.
- The whole Indian market will be a unified market which may convert into lower business costs. It can promote smooth movement of goods across states and minimize the transport costs of businesses.
- It is best for export oriented businesses because it is not applied for goods which are transferred out of India.
- In the long run, the lower tax burden could translate into lower prices on goods for consumers.
- It can bring more transparency and better compliance.
- minimize in number of departments which in turn may lead to less corruption
- More business entities will come under the tax system thus widening the tax base. This may lead to better and more tax revenue collections.
- Companies which are under unorganized sector will come under tax regime.
Challenges for implementing GST
- To execute the bill there is to be lot changes at administration level, Information Technology integration has to happen, sound IT infrastructure is needed, the state governments has to be compensated for the loss of revenues.
- Goods and Services Tax, being a consumption-based tax, states with higher consumption of goods and services will have better revenues. So, the co-operation from state governments would be one of the key factors for the successful implementation of this.
- As GST replaces many cascading taxes, the common man may benefit after executing it.
