Why gst is good

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India Matters. This has helped eliminate the cascading effect of taxes and contributed to the seamless flow of input tax credits across both goods and services. GST laws in India are far more stringent compared to any of the erstwhile indirect tax laws. Under GST, taxpayers can claim an input tax credit only on invoices uploaded by their respective suppliers. This way, the chances of claiming input tax credits on fake invoices are minimal.

The introduction of e-invoicing has further reinforced this objective. Also, due to GST being a nationwide tax and having a centralised surveillance system, the clampdown on defaulters is quicker and far more efficient. Hence, GST has curbed tax evasion and minimised tax fraud from taking place to a large extent.

GST has helped in widening the tax base in India. Previously, each of the tax laws had a different threshold limit for registration based on turnover. As GST is a consolidated tax levied on both goods and services both, it has increased tax-registered businesses. Besides, the stricter laws surrounding input tax credits have helped bring certain unorganised sectors under the tax net.

For example, the construction industry in India. Previously, taxpayers faced a lot of hardships dealing with different tax authorities under each tax law. Besides, while return filing was online, most of the assessment and refund procedures took place offline.

Now, GST procedures are carried out almost entirely online. Everything is done with a click of a button, from registration to return filing to refunds to e-way bill generation. It has contributed to the overall ease of doing business in India and simplified taxpayer compliance to a massive extent.

The government also plans to introduce a centralised portal soon for all indirect tax compliance such as e-invoicing, e-way bills and GST return filing. A single indirect tax system reduces the need for multiple documentation for the supply of goods.

GST minimises transportation cycle times, improves supply chain and turnaround time, and leads to warehouse consolidation, among other benefits. With the e-way bill system under GST, the removal of interstate checkpoints is most beneficial to the sector in improving transit and destination efficiency.

Ultimately, it helps in cutting down the high logistics and warehousing costs. Introducing GST has also led to an increase in consumption and indirect tax revenues. Due to the cascading effect of taxes under the previous regime, the prices of goods in India were higher than in global markets. Even between states, the lower VAT rates in certain states led to an imbalance of purchases in these states.

Having uniform GST rates have contributed to overall competitive pricing across India and on the global front. This has hence increased consumption and led to higher revenues, which has been another important objective achieved. GST has mainly removed the cascading effect on the sale of goods and services. Removal of the cascading effect has impacted the cost of goods. Since the GST regime eliminates the tax on tax, the cost of goods decreases.

Also, GST is mainly technologically driven. The government succeeded in completing a daunting task, which involved reaching a consensus with the States, allaying the fears and apprehensions of the industry, striking a balance between revenue augmentation and ease of business, and ultimately passing the Constitutional amendment to codify and implement the GST law.

The implementation of GST required strong leadership from the Central government and a willingness to cede certain powers by both the Central and the State governments in the true spirit of co-operative federalism. With GST recently turning 3, we look into some of the positive and negative aspects of this regime, understand how it can be stabilized further and what the future holds. The government has been largely successful in achieving the objective of bringing the country closer by removing inter-state barriers, to enable smooth flow of goods across the country and ease of doing business in India.

One Nation, One Tax The structure of GST has integrated all Indian states into a single, common market by eliminating multiple indirect taxes, such as central excise duty, services tax, additional customs duty, surcharges, state-level value-added tax, and octroi.

Elimination of multiple levies has eliminated the cascading effect of taxes and reduced the tax complexities as the businesses just have to deal with one tax across India. Creation of One Nation One Market Earlier, logistics companies had to maintain multiple warehouses across the country to avoid state entry tax on interstate movement of goods. A uniform indirect tax law has also reduced the economic distortion amongst States, caused by varied indirect tax policies, and turned India into a true common market.

Boost to the economy and targeted increase in government revenues GST has given a boost to India's tax to Gross Domestic Product ratio, which is an indicator of economic efficiency and sustainable long term growth. Over a span of three years, the government has been successful in achieving the milestone of an increased tax base with 1.

As a result, the taxpayers have to be vigilant and ensure that their compliances and reporting are accurate, which helps to avoid complications at a later stage.

Through robust checks and balance, the government has been successful in bursting tax frauds and racket of bogus billings in India and recover legitimate due of taxes. In addition, filing online GST refunds and their speedy disbursal has given a boost to the exporters, setting an excellent example of what can be achieved through technology.

Transparency The taxpayers can track their compliances online on the GST Portal, access their past compliance records, verify the compliance status of suppliers, ensure that the supplier has declared its supplies to their business correctly, track applications, etc.

Despite the positive aspects, certain concerns need to be addressed by the GST Council. We have captured a few key issues, which are plaguing businesses:. Tedious compliances The GST law requires taxpayers to get themselves registered in all the states of their operations. This not only increases the compliance burden but also increases the financial burden. Besides, everything from registration to return along with payment is now online, making it difficult for small scale businesses who are still grappling with the complexities involved with online compliance system.

However, on many occasions, businesses have had to face hiccups on the GST portal resulting in delayed fillings and misreporting, which can eventually lead to unwarranted litigations. At times, the government even had to provide extensions in due dates and deferments in the implementation of certain changes such as e-invoicing and the new return filing system.

Tax burden on small businesses Under the erstwhile laws, the Central excise was only paid by businesses with an annual turnover of above INR 1. However, with the new tax regime, any business with an annual turnover of above INR.