There has been a major reform in India’s after the implementation of indirect tax system (GST) on July 1, 2017. GST aims to simplify the tax collection process, eliminate the benefits of taxation and create an independent national economy. Integrating various taxes such as central tax, excise duty and state VAT, GST is a major change for more efficient and effective taxation in India. In the present blog I will try to get a basic understanding of the history and the benefits of GST in India which every business person must know.
Understandings of Goods and Services Taxation in India
Organizations that rely on the refund mechanism and exported products, as well as sites that choose to register to obtain tax documents and issue invoices under GST, are also required to register under the same. GST registration in India provides legal recognition, tax compliance in tax returns and provides a competitive advantage by ensuring compliance. GST includes special Additional Duty of Customs(SAD), service Tax, state Value Added Tax (VAT), central Sales Tax (CST), entry Tax, purchase tax, luxury tax, taxes on lotteries, betting and gambling etc.
Casual taxable persons, Non-resident casual taxable persons, Persons making any inter-state taxable supplies, E-commerce operators, TDS/TCS deductors, individuals working in the import-export industry, persons subject to reverse charge taxation, individuals running an aggregator company, Input Service Distributors etc can take GST registration in India by simply following the steps given below:
- First Go to the GST portal.
- Fill out Part A of GST REG-01 form using PAN, mobile number and email
- Receive a TRN whose full form is Temporary Reference Number on the registered mobile and email.
- Fill Part-B of Form GST REG-01 using the TRN, upload documents, and submit.
- After that you Receive an Application Reference Number (ARN) via your email and Phone number..
- The application is processed and, if approved, GSTIN is issued.
History of Goods and Services Taxation in India
In order to understand the history of GST in India we have divided it into following points:
GST Applicable Dates in India
In 2014, Finance Minister Arun Jaitley introduced the reform bill in Parliament. Lok Sabha passed the Constitution (122nd Amendment) Bill in May 2015. GST applicable dates in India include April 20, 2017, when the Lok Sabha and the Rajya Sabha passed the Integrated GST Bill, 2017, the Union Territory GST Bill, 2017, the Central GST Bill, 2017, and the GST (Compensation to States) Bill. Goods and Services Tax law was implemented in India on the 1st of July, 2017.
GST Formative Years
- 2000: Established of the Empowered Committee of State Finance Ministers
- 2006: Finance Minister P Chidambaram announced GST’s impending implementation.
- 2009: Empowered Committee submitted India’s first discussion paper on GST.
GST Legislative Developments
- 2011: The Constitution (115th Amendment) Bill introduced.
- 2013: Standing Committee on Finance submitted a detailed report.
- 2014: Lok Sabha dissolution led to the lapse of the Bill.
Turning Points for GST
- The bill was passed by the Lok Sabha and the Rajya Sabha as the Constitution (101st Amendment) Bill.
- Assam became the first state to approve the bill.
- After that President Pranav Mukharjii approved the Bill.
- The GST Council constituted and held its first meeting in New Delhi.
Benefits of GST Registration in India
There are many advantages of GST enrollment for individuals, entities, businesses, consumers as well as state or central governments. Some of the are:
Benefits of GST for Businesses
- Eliminate increased taxes and streamline processes to effectively reduce operating costs.
- The creation of a common market in the country and the movement of goods across the state allow the economy to expand and grow over a wider area.
- Greater transparency and lower costs can lead to competition in domestic and global markets.
- The online payment process and centralized filing process make paying taxes easier and faster.
- Financial institutions generally evaluate business loans based on the GST returns filed by the business entity.
Benefits of GST for Consumers
- GST increases the transparency of the tax system. With effective online portals and real-time transaction tracking, governments can better monitor compliance.
- This added transparency instills confidence in consumers as they can be confident that the correct taxes are being paid for the products they purchase. Additionally, increased compliance will generate more revenue for the government that can be used for a variety of health purposes.
- The simple and transparent tax structure of GST has reduced black market incidents. In the past, high taxes encouraged sellers to avoid taxes and work in unorganized sectors.
- However, due to the low GST rate and easy compliance, the incentive to participate in the black market has disappeared. This ensures that customers purchase original and quality products.
- Therefore, companies can pass the benefits of the tax reduction on to consumers in the form of lower prices.
Benefits of GST for the State and Central Government
- Many indirect taxes at the central and state levels cause a lot of complexity and confusion, making management difficult. Direct tax administration under GST will be easier as the IT system is robust and uncomplicated.
- Corruption has always been one of the biggest problems facing India. GST has proven to be a much-needed step against tax evasion and corruption due to its strong IT infrastructure, refund and payment system and minimal impact on people.
- Since indirect taxes are applied at different levels, the cost of collection is also high. However, GST is expected to reduce the cost of government and hence increase revenue. Income must increase due to other factors in the surrounding factors.
Conclusion
Goods and Services Tax is a significant change of the Indian expense framework that has worked on the duty structure, decreased costs, and expanded the straightforwardness of web based business stages with choices to go digital. Hence we have discussed the entire history and the benefits of GST in the current blog. Nonetheless, there are critical issues with GST reception for web based business organizations, and it will require an investment to receive these rewards completely. To keep up with consistency with the new tax system, online businesses should remain up to date on the GST laws and regulations and work closely with their tax experts.
FAQs
- Is there any Eligibility for GST Registration in India?
Casual taxable persons, Non-resident casual taxable persons, Persons making any inter-state taxable supplies, E-commerce operators, TDS/TCS deductors, individuals working in the import-export industry, persons subject to reverse charge taxation, individuals running an aggregator company, Input Service Distributors etc are eligible to take Goods and Services Tax registration in India.
- Are there any benefits of GST Registration?
Eligible for input tax credit and participation in interstate trade without restrictions are some common benefits of GST.
- What are the Important Documents required for GST Registration?
- Certificate of Business Registration and incorporation
- Identity Proof (AadhaarCard, PAN Card, etc) and Address Proof (electricity bill, Home rent Bill etc) with a photograph
- Bank Account Statement
- Letter of Authorisation
- Digital Signature.
- What are the different types of goods and services tax in India?
Central Goods and Services Tax, State Goods and Services Tax, Integrated Goods and Services Tax, Union Territory Goods and Services Tax.
- What taxes were subsumed under GST?
GST subsumed various central and state taxes, including:
- Service Tax
- State VAT
- Central Sales Tax (CST)
- Entertainment Tax (other than the tax levied by local bodies)
- Octroi and Entry Tax
- Purchase Tax
- Luxury Tax
- Taxes on lottery, betting, and gambling
