Listen to Divya dialogue with Neha from CAxpert about the GST jargon and the must do’s for every young company.
What is GST?
Goods and Services Tax is an indirect tax used in India on the supply of goods and services. GST is an incremental change and not a radical one.
Why did GST come into play?
GST has been designed to prevent evasion of taxes. So if anyone who was getting away with certain things, the GST has cut it down. At the moment the government’s main prerogative is it to reduce evasion.
Dual GST System
The GST levied by the centre on intrastate supply of goods and/or services is Central GST (CGST) and that by the states is State GST (SGST).
If a good or product is provided inter-state, between one state and another, then it will call for an Integrated Goods and Services Tax (IGST).
What has the impact of GST been on our economy?
Tax collections have been buoyant for the last few months, as we are not meeting our targets. The government has been worried about the same.
When GST was implemented there were 300 revisions within the first 10 months itself. According to Arvind Subramanian, former Chief Economic Adviser to the Government of India, no country has got GST law right in the first attempt.
One Nation One Tax
The GST replaced 14 laws that made compliance a lot easier. A small business owner now has to deal with only 1 law rather than 14.
GST Registrations
Initially when someone had to register for GST – people were charging them Rs. 15,000. Today registrations happen for less than Rs. 1,000.
Once small businesses register for GST, they can start claiming the input tax credit.
Income Inequality
Even today, there are 7 tax slabs for GST in India due to income inequality. Due to which, goods are categorised based on pricing.
When does GST become applicable to a consumer?
Goods like fruits and vegetables are exempt from GST. But if someone is buying a capital good or a transactional good like a car, laptop, furniture, etc. GST becomes applicable.
When does GST become applicable to small businesses?
If your turnover is more than Rs. 40 Lacs or you might be selling online, then GST becomes applicable to you.
*With the onset of the new financial year from 1st April 2020, there will be changes in the GST filing process.
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