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What are the Benefits of GST in India
Posted on 12\06\2017 by Interlink Capital
TThere will be a substantial shift from origin-based taxation to a destination-based tax structure impacting not only the operating business models but also the revenues of the centre/states. GST is likely to impact cash flow, pricing, working capital, supply chain and IT systems and hence provides an opportunity to transform your business. We help businesses to predict policy changes, assess their impact on their operations, get benefits of GST and engage in a constructive dialog with relevant authorities for remedial measures to address any concerns. We have diverse VAT and GST experience through extensive interactions with both the Centre and the State Governments in India and overseas engagements in various jurisdictions. It is a ‘game-changer’ and has laid a stone in revamping of present Indirect Tax Mechanism. It has enhanced cost competitiveness of goods and services.
What are the Advantages of GST to Businesses and companies?
• In the GST system, both Central and State taxes will be collected at the point of sale.
• Both components (the Central and State GST) will be charged on the manufacturing cost. This will benefit individuals as prices are likely to come down. Lower prices will lead to more consumption, thereby helping companies.
.As the prices of commodities are expected to come down in the long run as dealers will be allowed to avail the CENVAT credit of excise duty paid by manufacturers and more over he will be allowed to avail the CENVAT credit of tax paid on services also. This passing of the benefits of reduced tax to consumers by slashing the prices of goods will help in increasing sales.
• Under GST, the taxation burden will be divided equitably between manufacturing and services, through a lower tax rate by increasing the tax base and minimizing exemptions.
.GST will be levied only at the destination point, and not at various points (from manufacturing to retail outlets).
• Currently, a manufacturer needs to pay tax when a finished product moves out from a factory, and it is again taxed at the retail outlet when sold.
• It is expected to help build a transparent and corruption-free tax administration.
• You will get the GST Benefits like - GST credit, GST Refund, GST exemption etc
All You Need To Know about 'Goods and Service Tax':
• The Goods and Services (Read more about GST) is an indirect taxation where in most of the existing taxes will be converted in one taxation system.
• Once the GST Bill is passed, it will allow the Centre and the states to levy indirect tax on manufacture, sale and consumption of goods and services across the country.
• the Goods and Services Tax would put all taxes levied by state and Central government in one basket and merge them into a single-tax system, thus doing away with multiple taxation and promoting the concept of a common market for all.
• The Goods and Services Tax is governed by the GST Council which is headed by the Finance Minister. In Arun Jaitley's words, "once all other taxes are removed, the cascading effect is removed, goods will become slightly cheaper".
• The biggest challenge for a GST rollout is coordination between states and the Centre for uniform tax rates for goods and services.
• To this effect, the GST Council has approved a four-tier uniform tax slab of 5, 12, 18 and 28 per cent on goods and services, plus an additional cess on demerit goods such as luxury cars, aerated drinks and tobacco products.
• In new rules food items will not attract any tax and have been kept in the zero-per cent slab. Similarly, petroleum products, although included under the GST, will remain in zero tax slabs as of now. However, the GST Council is yet to take a call on whether to keep alcohol under the Goods and Services Tax.
• With the Goods and Services Tax coming in, Centre-level taxes like Sales Tax, Excise Duty, and state-level taxes like Value-added Tax (VAT), Entertainment Tax and Luxury Tax will be subsumed
•Among the four suppletory GST bills passed in Lok Sabha was the Central Goods and Services Tax (CGST) Bill. The CGST Bill will allow the Central government to levy and collect tax on intra-state supply of goods and services.
Existing taxes proposed to be submerged under GST:
• Central Excise Duty,
• Additional Excise Duties,
• The Excise Duty levied under the Medicinal and Toiletries Preparation Act,
• Service Tax,
• Additional Customs Duty, commonly known as Countervailing Duty (CVD),
• Special Additional Duty of Customs - 4% (SAD),
• Surcharges, and
The following State taxes and levies would be, to begin with, subsumed under GST:
• VAT / Sales tax,
• Entertainment tax (unless it is levied by the local bodies),
• Luxury tax,
• Taxes on lottery, betting and gambling,
• State Cesses and Surcharges in so far as they relate to supply of goods and services,
• Entry tax not in lieu of Octroi.
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