The GST or Goods and service tax is a comprehensive, destination-based and multi-staged tax that replaces a variety of indirect taxes in the country. The tax is comprehensive because it subsumes various taxes into a single tax, multi-staged because it is charged at every production process, and destination-based because it is collected from the final point of consumption, unlike the previous tax system that charged taxes from the point of origin. It is charged on the supply of both goods and services. The tax is collected in five slabs. The GST slabs are 0%, 5%, 12%, 18% and 28%. The tax was brought to action on July 1 2017, and from then till now has been in debate for the benefits it offers. There are a number of benefits that GST offers. Some of the points that make paying GST a beneficial deal are listed as follows:
GST created a unified taxation system: Prior to the launch of GST, different states had their own norms and cultures when it came to taxation. The states had the right to independently govern the tax routine, without adherence to the rest of the nation. Thereby, the tax system was often not transparent. However, the GST runs on the idea of ‘one nation, one tax’. Thus now goods and services are available at the same prices at different places, unlike the previous times. The GST has unified the taxation system, as all of the tax routines are now regulated by one single authority.
GST disqualified the tax-on-tax culture: Previously, under the older taxation system, the goods and services were taxed for different stages of production, until the final consumption was made. This made it costly because every transaction on a single good was marked by taxes. The burden of this was, however, imposed on the final consumer. Thereby, multiple taxes were charged on a single good. For instance, the same good is charged with VAT at one stage, and excise duty on others. However, as per GST, only a single tax is imposed on a single good or service. Though it is multi-staged yet it is refunded to every party, as and when the transaction occurs.
GST made it easy for the small business traders: The Goods and service tax brought in a composition scheme for the small business owners. As per the composition scheme, small business owners can pay fixed taxes or GST by paying it a fixed rate of turnover. The scheme can be opted by business enterprises where the annual turnover is less than Rs 1 crores. This has made it easy for small businesses by reducing the tax burden. The composition scheme also allows these business owners to pay only one quarterly return.
GST brought ease to tax filing: Prior to GST filing tax was a difficult thing to do. However, the advent of GST in the country brought a digital makeover for the tax sphere. Now whether it is the GST registration or the filling of the ITR returns, everything can be done online while being at comfort. Also, since GST made multiple taxes into a single one, thereby, taxpayers do not need to run for a number of taxes like the previous tax regime. Indeed, they simply need to be aware of a single tax across all states and across all goods and services, that is GST. Thus, taxation became manageable for common people.
GST ‘organized’ the unorganized sector: The unorganized sector covers the business units that are not registered and that have been unregulated for a long time, for instance, the construction of the textile industry. As per the economic surveys taken in the country, the implementation of the GST increased the tax base of the country by 50%. This happened due to the fact that GST added a lot of indirect taxpayers in the taxation regime. Further, a number of small industries from these sectors have appeared as voluntary registers for GST, in order to benefit from the input tax credit benefit.
On a concluding note, we must remember that ‘Rome was not built in a day’. Therefore, similar to all changes, the changes brought by GST will be successful with time. It has definitely made the tax culture in the country more transparent and convenient, and with time GST will be able to add more feather to its hat.