GST or Goods and Services Tax is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. GST is basically a tax on consumption of goods and services, and is applicable to all the businesses that are registered under it. GST was introduced in July 2017 in India and is applicable to all the states except Jammu & Kashmir. The implementation of GST has resulted in the unification of the Indian market, making it easier for companies to do business in different states.
GST is a single, indirect tax that has replaced several taxes that were previously levied by the Central and State Governments. This has resulted in higher tax compliance, higher revenues and an improved tax system. Under GST, businesses are divided into three categories – Goods, Services and Composite Supplies. Each category is subject to different tax rates.
GST is paid at each stage of production and distribution of goods and services and is collected by the government. GST is beneficial to businesses, consumers and the government. It ensures that businesses are taxed at a uniform rate, resulting in a level playing field for all. It also reduces the burden of taxes on businesses, as they no longer have to pay multiple taxes at different stages. For consumers, it means that the prices of goods and services are lower, as the tax burden is spread out across the entire value chain. GST has also simplified the tax system and made it easier for businesses to comply with the tax regulations.
It has also helped the government increase its revenues, as it is able to collect taxes from a wide range of businesses. Overall, GST is a welcome change for businesses, consumers and the government. It has unified the Indian market, resulted in higher revenues for the government, and reduced the tax burden on businesses and consumers.
importance of GST in business
- Streamlining of Taxes: The GST replaced multiple taxes levied by the Central and State Governments, and thus simplified the tax structure.
- Removal of Cascading Effect: The cascading effect of taxes is avoided as the GST is levied only on the value addition at each stage in the supply chain.
- Increased Tax Compliance: GST is expected to reduce the scope of tax evasion by bringing a large number of taxpayers under its ambit.
- Improved Efficiency: The GST has enabled the formation of a unified market in the country, thus making it easier for businesses to operate and expand.
- Increased Revenue: The GST has led to an increase in the tax base and improved compliance leading to an increase in the revenues of the Central and State Governments.
- Relieving Inflationary Pressure: The GST has helped reduce the cost of goods and services by removing the cascading effect of taxes. This, in turn, has helped in reducing the inflationary pressure in the country.
- Boost to Exports: The GST has helped reduce the cost of production for exporters, thus making their goods and services more competitive in the global market.
