The Government of India introduced GST to standardise and unify the existing taxation system. Even with substantial rate reduction, GST earnings have experienced a notable rise with a collection of above Rs.10 lakh crore as of FY 19-20.
For individuals who do know GST meaning- Goods and Services Tax is an indirect tax regime levied by the central and state governments, on services and products.
Previously, several taxes like VAT, service tax, etc. had different return-filing processes. However, as GST is a comprehensive taxation system, there is only one unified process to file the returns.
Taxpayers only have to enter their Goods and Service Tax login credentials to access the returns-filing page to do the same.
Here are some benefits of GST –
- Standardises taxes among all states
Before GST was introduced in India, local state governments were entitled to collect numerous indirect taxes in different forms such as service tax, VAT, sales tax, etc.
Furthermore, local governments also used to practice incentive systems to manipulate the taxation rules.
Thus, with this taxation system, the price of a good or service used to vary in different states. With GST, taxpayers have to pay tax based only on the products and services across the country. They only have to provide GST login credentials on the official portal to file their returns.
- Phased-out the tax on tax or cascading tax effect
When a series of taxes are implemented on products, it is known as the tax on tax or cascading effect of the tax.
In this system, taxes are levied after moving from one individual/entity to another until purchased by consumers. So, buyers and sellers had to bear all these taxes, which accounted for a substantial rise in the prices.
Now, the tax liability has considerably reduced – on the GST portal online, taxpayers pay only SGST, CGST, and IGST, as per applicability, on goods and services that successively bring down the costs.
Registered taxpayers can use a GST calculator for manufacturers to determine their liability easily.
- Increased the exemption threshold of turnover
With the introduction of GST, the exempted turnover limit is high, which eventually helps small businesses to avail tax benefits.
According to the 32nd GST Council, the following are the latest impacts of GST –
- Businesses only have to register and avail a GSTIN if their annual revenue is Rs.40 lakh or above. Earlier, this limit was Rs.20 lakh.
- The threshold for GST exemption has increased to Rs.20 lakh from Rs.10 lakh for the special category and hilly states.
North-eastern and hilly states can choose between Rs.20 lakh and Rs.40 lakh of turnover limit for GST exemptions.
Businesses above this threshold can register on the official GST portal. They can then use their GST portal login username and password to access their profile and file the returns.
- Composition scheme benefits
Under the GST composition scheme, a small business can pay a fixed rate of tax on their yearly turnover.
- Manufacturers and traders with turnover up to Rs.1.5 crore need to pay flat 1% GST.
- Restaurants not servicing alcohol have to pay Rs.1.5 crore need to pay a GST of 5%.
- Service providers with a yearly turnover of up to Rs.50 lakh need to pay 6% GST. Furthermore, the percentage of tax was 18% previously.
Those opting for the GST Composition Scheme have to file their returns on a quarterly basis. Businesses opting for this scheme can save profits after tax, which can help them to avail external financing and repay it without any hassle.
Further, if a company is registered under GST, the entire process of availing a business loan becomes easy. NBFCs like Bajaj Finserv offer such loans against simplified eligibility criteria and minimal documentation.
The company also provides pre-approved offers that lower the time is taken to avail financing by making the process straightforward. Several financial products such as personal loans, business loans, etc. are also available with pre-approved offers.
To sum it up, the GST meaning has made the taxation process simpler in India. Even though there are some drawbacks, but this unified tax system, from registration to return filing, has made the system better.