The Goods and Services Tax (GST) revolutionized the taxation system in India since its effect in 2017. It has transformed India into a one consolidated market that lets goods to be transported intra-state without any charges.
GST is an all-inclusive, consumer and destination based indirect tax which has replaced a long list of other indirect taxes such as the value added tax (VAT), excise tax, luxury tax, etc. GST is imposed on every sale and value addition. The type of sale determines the type of GST that is payable.
Intra-state (within state) sales are payable of the CGST and SGST. The CGST is acquired by the central government, whereas the SGST by the state government. Both are equally distributed. In case of inter-state (between states) sales are liable only to the IGST which is collected by the central government and revenue of the same is acquired by the destination state to which the sale is made.
Additionally, all GST filing and payment is done completely online which makes it much more user friendly, environment friendly as well as transparent to both, the taxpayer as well as the tax collector. Considering the bigger picture, GST targets a boost in the economy as there is increment in demand and supply of goods and services due to drastic reduction in costs of input for goods and services for production from other states.
The payment of GST is done via online portals by registered GST professionals in the form of a document called ‘GST return’. A GST return includes purchases, sales, output GST (on sales) and input tax credit (on purchases). An average scale business is required to file 26 returns in a year; two monthly returns and one annual return. Whereas composition dealers (small taxpayers, with turnover under; 1.5 Cr) can opt to 5 filing per year and pay GST at a fixed rate of turnover.
Pre-GST, the e-commerce sector taxation was fairly vaguely defined. The VAT laws were variable and often goods were seized if documentation was not produced on inspection. This created a huge dependency of transportation of goods based on documentation the company has produced. The GST regime has updated and fixed laws of taxation for the e- commerce industry, making it easier to execute. As off transportation of goods is concerned, another compliance under the GST regime is the e-way bill system. For transportation of goods (under Rs.50,000), an e-way bill can be generated online much faster and, in a hassle- free manner. This allows the transportation to be documented timely as well as clear records can be presented if at all inspection is required.
The benefit effect of GST is multi- fold, previously the final consumer of a product/service payed multiple taxes on it, however under the GST regime, at every stage from material to market, the final consumer pays only for the value added at every stage and not the entire tax amount itself. This has led to a great reduction in prices as well as in maintaining a stable tax rate across the country.
Lastly, GST has a huge contribution to the government revenue which continues to improve India’s marking in the ease of doing business index. Statistics show an estimate of 1.5 – 2% growth in the gross domestic product (GDP) of the country in the future due to GST implementation alone.
To conclude, the goods and services tax has enabled an ease in a large spectrum of businesses as well as common people taxation benefit. It continues to increase the value of Indian products in the market as it negates the custom duties liable on exports and make business taxation more effective, cheaper and user-friendly. In the first year of GST implementation, there set a record for over 50% more indirect taxpayers, which brought on board the unauthorized business voluntarily. The GST has and continues to benefit every common person in the country and every business in the industry.