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Tag: GST Transection

  • Is GST better than the previous tax system?

    The question of which tax system is better is debatable. Before GST was introduced, the VAT system was followed in India. GST not only brought an excellent revolution in the Indian economy and society but also it increased the government revenue. Is GST practically better than the previous tax system?

    What is GST(Goods and Services Tax)?

    GST is considered as the most economically influential post-independence tax reformation in India as it has redesigned the whole concept of taxation. Being a consumption-based system, it is completely transparent and convenient than the previous tax structures. It has disregarded to society like tax-evasion and corruption on a greater level.

    In a longer period, it did not only brought an amazing boost to the Indian economy and society but also the government revenue increased. It practically removed the main problem of the previous tax system which was cascading effect.

    GST is a value added tax that is collected at every level in the supply chain process. In the earlier indirect tax time, in certain cases, the tax paid on commodities or services were not available for setting off the output tax liability. For example, the excise paid by manufacturers were not available for set-off against VAT.

    Impact of GST on Startups and Small Businesses in India
    GST was implemented in India in July 2017. The GST was meant to replace a slewof indirect taxes with a federated tax. It has impacted almost all Industries,including start-ups. Startups are liable to pay taxes as they cross thethreshold limit are liable to pay GST from the moment they cross the t…
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    What is VAT(the previous Tax structure)?

    Most people are accustomed or aware of the VAT system even if they don’t run a firm or business. For instance, if you purchase any product or go to a hotel, in the lower part of the bill, you are likely to see an extra cost in the form of a percentage. This is called the value added tax, VAT.

    VAT is a consumption tax levied on a product at each stage of the supply chain. VAT has been a major reform for India’s tax system when it was introduced around 2005. This change was desperately needed due to issues with India’s previous taxation system, where the cascading effect of taxes had a negative effect.

    Is GST better than VAT

    How To Register For GST online | A Complete Guide For GST Registration Process Online
    If a seller wants to sell across India they need to register for GST. The GST ismeant to replace a slew of indirect taxes with a federated tax. In the GSTRegime, businesses whose turnover exceeds Rs. 40 lakhs* (Rs 10 lakhs for NE andhill states) is required to register as a normal taxable person.…
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    Educated Consumer

    Previous tax regime was loaded with multiple taxes at the state level which included VAT, Entertainment Tax, Luxury tax, Taxes on lottery, betting and gambling, State Cesses and Surcharges, Octroi, Entry Tax and purchase tax. Multiple taxes at the central level were also levied which included Central Excise Duty, Additional Excise Duties, Service Tax, and Additional Customs Duty.

    This multitude of levied tax kept the consumers confused and unsure on taxes being charged. Consumers were unable to check or verify the correct levy and payment of taxes, leading to consumers being overcharged on account of false taxes. GST is based on a PAN-India model tax system, consumers have become vigilant before paying taxes. GST being a “ONE NATION ONE TAX”, has helped rationalize and revolutionize the whole economy.

    Reduction in Logistic cost

    A leading logistics company recently said that after the implementation of the E-way bill and GST, heavy transport vehicles i.e. Trucks are covering 10-15% more distance as compared to earlier regime. In earlier regime trucks were hovering around 300-350 km per day, however, after the implementation of GST this distance has increased to 400-410 km per day. This has helped in the reduction of logistics costs. This reduction has brought India at the edge of a logistic revolution.

    Eliminate The Cascading Effect

    Cascading effect is a phenomenon of taxation that puts an extra burden on the end consumer. With the cascading effect in place, the taxes were levied on the value on which the previous buyer has already paid the tax. Thus, GST removed this tax on tax by bringing the concept of input tax credit that can be claimed at every stage by the seller or service providers.

    Simple Online Procedure

    The GST has brought in a new digital era in the Indian taxation system. All the process, right from the registration to the payment of taxes has been made online. This uniform e-registration is a considerable change as compared to the earlier decentralized multiple registration mechanisms.

    Destination-based Taxation

    With the onset of GST, the taxes were charged on the point of consumption, unlike the former tax structure that levied taxes on the place of manufacturing. This change from origin-based tax to destination-based tax has also significantly altered the revenue generation of producer states as well as consumer states.

    Real Estate

    The government has rationalized tax rates in the real estate sector from 12%/8% to 5%/1% also giving one-time option for ongoing projects to adopt the tax scheme. Home investors were forced to pay multiple taxes on real-estate buys in the pre-GST era, and in the post-GST period, they were forced to pay full taxes without benefit of ITC being passed to the consumers.

    Thereby commodities were always overpriced. With this new tax scheme, consumers are ensured that they are bound to pay an amount with a full benefit of Input tax credit flowing to them without any discretion of suppliers.

    The reduced tax burden on Tax Payers

    The tax burden before GST on taxpayer was considerably high. With GST adaption, the tax burden has reduced significantly since all taxes are integrated, and the burden is split equitably between manufacturing and services. Certain taxes became part of the cost. Therefore, with the simple mechanism of GST, the cost burden has reduced by removing such effect and providing credit.

    GST revenue Collection
    GST revenue Collection

    The GST components

    CGST

    Central GST is referred as CGST, applicable on supplies within the state. Tax collected to be shared with the Centre.

    SGST

    State GST is referred as SGST, applicable on supplies within the state, whatever tax collected will be shared to State.

    UTGST

    Union Territory GST is referred as UTGST, applicable on supplies within the union territory.

    IGST

    Integrated GST is applicable on interstate and import transactions. Hence, tax collected is shared between the Centre and State.

    Conclusion

    By implementing GST, the Indian government is looking forward to improving the economy by eliminating the cascading system of tax and controlling corruption in the business processes in India which were possible in the previous tax system.

  • Some Clicks is All You Need To Manage Your GST Transactions Now

    Goods and services tax (GST) is the indirect taxation system that came into effect from 1st July 2017 in India. Simply Put, It is a multi-level, destination-based, and fully comprehensive tax system. It has created the most significant transformation in the way consumers and businesses pay taxes. Earlier taxes paid were in various indirect ways, which were not only time consuming but also created hassles for businesses. With GST, it has subsumed almost all indirect taxes. And with the availability of GST billing software online, it has created greater ease and mental peace in managing and paying taxes. Be it in the retail, service sector, or GST on real estate. Goods and services tax (GST), in a way, revolutionized the way people pay taxes.

    Ease of filing taxes under GST

    GST Billing Software made filing of GST easy for taxpayers. At the beginning of GST becoming a law, it was difficult for taxpayers to file their GST. One of the major issues people found it difficult to file their taxes was that they were unfamiliar with the new system and a few new rules that made GST management a nightmare.

    For example: A normal taxpayer registered in one state should pay 25 tax returns during a financial year. If this taxpayer has an online store and supplies or sells his goods in all 29 states, then this taxpayer will have to file returns for all 29 states multiplied by 25. By this calculation, if you consider tax filing of a year, it will be about 725 returns. That is almost filing two returns per day. It would have been impossible for businesses like these, and GST billing software has made things easy for such taxpayers.

    There has been a massive debate about whether GST has had a positive or a negative impact on businesses in the initial days of it becoming an Act. The effect of GST on the real estate, too, saw a significant change with only 12% tax on under-construction properties and no tax applicable on fully constructed or ready to sell properties.

    GST for Different Kind of Businesses

    Though there has been a great change in different categories of businesses, it was not easy to implement. People were used to the old ways of submitting their taxes. Earlier, there was a very different format of submitting taxes for goods and services. It was a lengthy process not just for the individuals and businesses to fill out various tax forms but also during the transportation of goods. It was mandatory for vehicles transporting building materials like steel, bricks, or any other goods like consumables or machines to stop at every inter-state checkpoint. With changes through GST on real estate and all other businesses dealing with transporting goods, it saved transportation time by 20%, in turn, helping enterprises deliver faster, creating a better business.

    This not only drives home the point that GST helped tax payments become more transparent but also helped cut costs in some aspects for businesses. Though it helped reduce costs for some, it was a major financial burden for small businesses to hire an accountant on a regular basis to file GST because of how complex it was. This, in turn, created a demand for GST billing software as it helped in filing taxes more efficiently.

    There have been different accounting companies providing software solutions for GST since the implementation of the Act, and it could become quite confusing in making a choice of what software is best for you. Most of the software that is available in the market doesn’t have an accounting feature, and the ones that do have the accounting features are complicated for a user with little or no knowledge. It would be best if you kept in mind to choose software that not only has an accounting feature but is also not complicated. With accounting features, one can easily manage daily expenses, banking, clients, supplier’s accounts, balance sheets, financial statements, profit, and loss, etc.

    While choosing software to manage GST with just a few clicks, you should consider a few crucial points:

    • Security: This point cannot be stressed enough. A secure software not only gives you peace of mind but also prevents you from any hack or fraudulent activity with your account.
    • The software should provide an option to add more than one business or shop.
    • Look for an auto-update option because there are updates provided by the government from time to time, an option to update with one click will help not only in working on software with ease but also save you from any unwanted inconvenience that may occur.
    • If you already have a GST number, then you might already know that GST is of two types. Regular GST and Composition GST. It would be best if you made sure both these options are available in the software.
    • A backup option is a must in any work related to files, and with financial documents, it is mandatory. There may be incidents of computer damage, hacking, accidental deletion of data, etc. and a backup could save your day if you happen to experience any such event.
    • If you have a garment or a footwear shop, then the software you choose should have the option to calculate the variable tax. An item that you sell for Rs.1000 might have a tax of 10%, but if you sell that same item with a little discount and below Rs. 1000 then the tax could come down to as low as 5%. Having a software that is smart enough to calculate these kinds of tax slabs could help you save big bucks.
    • You should check if there is a multi-user option in your software. Often you might not be available to file every sale or purchase, and you might appoint someone from your employees. The software should have an option that allows a controlled or limited use so that the person handling your software doesn’t change or edit any listings which they are not supposed to.
    • An accountant might not always be available when the due date for filing your taxes arrives. Software with an option to upload files like GSTR 1 and GSTR 3b directly to government websites without the help of an accountant will be hugely helpful.
    • For wholesalers whose invoice bills are more than Rs.50,000 and above, an E-way bill is compulsory. Consider Choosing software that has an option to generate an E-way bill.
    • “Multiple alternate units” option. If you buy and sell in bulk and if you happen to sell 1 item from a box of multiple units. The software should be able to check the remaining units in the box.
    • An option often overlooked is to check whether software could print invoices on all types of papers, whether it is A4, A5, 58mm, etc.
    • Everyone needs to file their taxes on time and are complaint and are in the invoicing chain. A software that is flexible to work on multiple platforms like a computer, phone, or tablet will help you keep your files updated on the go.
    • Software that works on multiple platforms also helps cut costs. Considering this option while choosing software will benefit in a more significant manner in the long run.
    • Not-so-popular, but a great feature in software would be to have a loyalty program. A program where you enter customer details, and on a second or third visit, you give a certain discount. It will help create a solid bond that will keep customers coming back.

    Conclusion:

    The ease of filing taxes with GST billing software considerably helps taxpayers. But getting the right software that is perfect for you will make a considerable difference. There are different software like Vyapar, Profitbooks GST, Zoho books, Tally ERP 9, and Khatabook. These and many other software companies help taxpayers who are looking for filing GST on retail, GST on real estate, or any other category files their taxes easily.