The GST reform has been successfully passed in both the houses of Parliament and the Government is ready to roll out the new tax structure in coming months, ie from 01 July 2017, to be precise. So what is GST? GST stands for Goods & Service Tax which will simplify the tax structure in India. This tax system will be beneficial for both businesses as well as individuals. As far as businesses are concerned, GST will be quite beneficial as it will lessen the burden of several return filings and will also eliminate the geographical barriers for trading companies. GST's integration with Tally ERP 9 will be a great value addition for businesses looking to automate their return filings as compared to manual.
Organizations would prefer GST over current tax regime
Being a dual concept tax system, it's vital to comprehend GST's essentials. This system lets both the State as well as Center governments to manage, collect as well as share the tax based on how the transaction is done. Undoubtedly, its way different from the current tax regime and once into implementation will make the life of people and small and medium sized businesses easy. Now, let's see what GST brings in new as compared with the current tax regime.
- The current tax regime in India includes different laws for different taxes, whereas in GST there will be only one law as this tax structure will incorporate different taxes
- Current tax regime has different rates whereas this system would include a single CGST rate and a constant rate of SGST across all states
- The credit of CST and the fact that many taxes aren't allowed in the current tax system will lead into a spilling effect. GST won't give a rise to this situation as the concept of CST will be completely removed after IGST gets introduced.
- The current tax regime levies heavy taxes on the tax payer thus putting a lot of tax burden on him / her. When GST gets introduced, the tax burden is likely to be lessened as all the taxes will be integrated which will further divide the tax burden.
- Some taxes get included in the cost due to the presence of cascading effect. However, in GST the burden of the cost is reduced as the effect is eliminated by the mechanism by providing credit.
- The current scenario doesn't empower both the State and Center on similar subject matter in the current tax system. However, in GST both the authorities will be commended with the power to make law on GST as the constitution will allow it to do so.
- In the current scenario, the tax structure is quite complex as there are several laws to be followed along with their necessities. In GST, the tax structure is extremely simplified as it would be governed by only a single law.
Many believe that GST is the best thing to happen to Indian tax system . Further, its integration with Tally ERP will make it reach millions of people. Also, the implementation of GST will further lead to more productivity and efficiency in delivering time based solutions.