Goods and Services Tax (GST) is one of India’s biggest changes in recent times. What’s even bigger is that this change will affect almost everyone! GST, Goods and Services Tax has been implemented throughout India from 1st July 2017. Broadly, the GST bill and its benefits are known to everyone. It has combined and replaced many other indirect forms of taxes such as Service Tax, VAT, and Excise. This has led to the nation finally achieving the goal of one nation, one tax.
The Government felt that the previous indirect tax regime had various loopholes and limitations, so it introduced sweeping changes in the tax structure.
Before we understand how the implementation of GST affects you as the customer, let us first understand what an indirect tax is.
An indirect tax is charged to a producer by the Government and passed on to the consumer who pays for it as part of a good or service purchase price.
Indirect taxes are different from direct taxes imposed directly on individuals and organizations based on their income.
If you pore over your receipts and tally up what percentage tax you’re paying, you might be surprised.
So here is how this new form of indirect taxes benefits you:
Noticeable decrease in the price of goods and services
Before the GST was implemented, every consumer paid taxes on taxes. This was called “tax on tax,” or the “cascading effect of taxes”. GST has discontinued this practice and therefore eliminated the cascading effect of taxes. Now the tax is calculated only on the value that the owner at that particular stage adds to the product. So now, the tax liability is not cascaded onto the final consumer, thereby preventing the product’s price from continually increasing. Moreover, letting the buyer take advantage of input tax credits reduces the sale price and lowers the cost for both parties.
Uniformity in prices across the country
The previous tax regime had the State Value Added Tax (VAT) system, wherein the states levied different taxes on the sale of products. Since this rate varied in different states, the final prices also varied. Moreover, certain kinds of taxes like entry tax were levied only in certain cases. As GST has unified all the taxes and introduced one nation one tax, there will be uniformity of prices for different goods and services across different states. Moreover, features such as the SAC code list have simplified the process further. This page has more information on these lists.
Easier accessibility to goods and services
A one-nation, the one-tax policy makes it unnecessary for consumers to travel from state to state to make major purchases that would allow them to save money on sales tax.
In addition, online shoppers will benefit from a reduced lead time. This will be possible by increasing efficiency in warehouse management, as today’s warehousing structure is contingent on the complexity of the present tax system.
Check out: How to Become a Successful Sales Manager?
Source@techsaa: Read more at: Technology Week Blog
