GST India – Goods and Service Tax
What is GST India??
- GST is a combined tax replacing all the indirect tax levied by State and Central government of India.
- Basically, GST = Central Sales Tax + State Sales Tax + Excise duty + Service Tax + CST + Surcharge + CESS + Luxury Tax + Entry Tax + Purchase duty + Vat + Entertainment Tax and many more…
Who should prepare for GST India?
You have to register under GST India if your/you’re
- Annual Turnover crosses 20 Lakhs.
- Website exists from where the supply of goods and services takes place.
- Registered for VAT under previous law
- Making Interstate transactions
- Paying tax under Reverse Charge mechanism.
- The producer of the Final Product.
- A Service Aggregator like OLA, Uber
- An E-commerce Aggregator/Operator like Amazon, Snapdeal etc.
- A Supplier to ECommerce aggregator.
- A Casual Taxable person – self-employed.
- A Non-Resident taxable person having no place of business.
How does GST India impact you?
If you’re a business owner, you will witness a complete transformation of the taxation system.
- Firstly, all registered merchants get a GST registration number. Their permanent account number linked to it.
- Secondly, there will be additional 36 returns per year to be filed on a single registration.
- Moreover, every Financial Transaction will come under the close Scrutiny of the Tax Department.
- That being the case, a merchant will be answerable to even the Smallest Transaction he does without sufficient knowledge of intricacies of the law.
- Additionally, they will be increased Compliance Burden: Three returns in a month to maintain will make their job harder. In other words, they will need to maintain a proper account of everything they do.
- Eventually, the merchant would need to stay updated with technology since the way in which accounts are required to be maintained under GST, they can only be maintained if a Proper Technology is used.
Why GST and Why Not?
Well if you’re a small trader or planning to become one, here are some eye-openers about GST India that makes you smile:
- Starting a Business gets within your reach: Since there would be lesser fees of procedural requirements and zero complications of different indirect tax rules across different states.
- Small Traders become Small Taxpayers: There has been an increase in the basic exemption limit to 20 lakhs, which is a 75 percent relaxation in the limit for small traders and manufacturers.
- Speed delivery of your Goods/Services: As the entry tax at check posts and interstate borders is expedited.
- Happy Manufacturers as well as Consumers: Due to the reduction of tax both for the manufacturer and the end user. For the simple reason that the manufacturer gets the benefit of input tax credits and the end-user pays only the tax charged by the last dealer or the retailer in the supply chain.
Every advantage may seem to have its own disadvantage. When in fact, GST India need not negatively impact SMEs (Small to Medium Enterprises).
- Managing ambiguity might become the biggest challenge.
- Moving from current tax era to GST would be a Period of Pain and inconveniences if SME’s aren’t embracing technology and processes in their accounting work. To put it briefly, this would require SME companies to inevitably have an Accounting Software System for billing and filing.
Where’s the solution?
Expectedly, businesses failing to comply with GST are failing in business too. All in all, Is my business GST-ready? Is the question to yourself. At any rate, even high-performing rebels in your industry need to ‘Manage up’. To put in other words, you need to “Manage up” too.
Fact is that under GST India- ”The process of tax payment, Tax credit, and refund of GST would be carried out electronically”.
Evidently, being GST compliant needs updating your Digital Accounting System. Again, with nearly 70 percent of small businesses in the country are yet to adopt digital technology in their business format, it is going to be a huge challenge for them to computerized themselves in the shortest period.
Fortunately, there is Accounting & Billing software like VYAPAR, which is GST ready. For SMEs, using such accounting software could be a good starting point. Using such Billing software results in a reduction in paperwork and time wasted in paying taxes.