financial services · Taxation

A Better Understanding Of GST And Its Benefits

The Goods and Services Tax system is soon going to change the picture of Indian taxation system for goods and services we use every day. It is designed with a very neutral structure so that it distributes the application attractively and efficiently. It has various benefits that will impact the national economy and income tax in a positive manner. Regarding income tax efiling, it will provide a larger tax base which will eliminate goods classification disputes and also will decrease the tax rate. It will also eliminate all double taxation system which will also decrease the purchasing cost of the goods.

It will reduce errors and will rationalize the goods and service tax structure by simplifying the compliance procedure. Goods and Services Tax will also harmonize the current taxation system which is different in different states. This will decrease the compliance costs which will ultimately affect the tax rates of the sellers. The other thing that will affect the seller’s income tax efiling as taxes will be destination based instead of origin based. Import and export industry will be affected hugely by this law as exporting will be zero-rated. For inter-state transfer of goods, state tax will apply as per the destination state.

There are many current taxation system which will be eradicated after this Goods and Services Tax comes into action. Central taxes such as Excise duty, service tax, custom duty, additional custom duty, central sales tax, central surcharges and all others will be taken off. For state level, taxes such as Value added tax, entry tax, purchase tax, luxury tax, state surcharge, entertainment tax and central sales tax will also be void. The reason income tax efiling will be affected because the goods supply chain taxation system will be modified after this law comes into action.

Also, it has been expected that the central and state GST will have common features and the inter-state supply will have a common Goods and Services Tax norms. Also an additional tax of 1% will be applied to supply of goods, but this is supposed to be granted by the central authority. But this tax will be applied only for the first two years as recommended by the authority. However, this new system is going to change the whole picture of income tax efiling in India.

Source : https://goo.gl/PfGFJz

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