GST

Effects on Taxpayer Under Revised GST

The concept behind GST is one taxation system for the entire nation as a whole. GST can be imposed on the goods and service provided to both the manufacturers and the consumers. The main factor as to why GST remains to be tax solely based on price addition of stages is due to the input taxes paid at every stage being obtainable within ulterior stages need there be its uses. Thus, the final dealer or the consumer gets the GST charges giving a slight advantage to the earlier stages dealers. The idea of GST and mono-taxation system in India goes back as far as the Kelkar Task Force in 2003. In 2003, the Kelkar Task Force first introduced and mentioned it in their report regarding the taxation of indirect taxes. Let’s have a look at effects on the taxpayer under revised GST.

What are the Effects on Taxpayer Under Revised GST?

Within the first release of GST discussion paper, it has triggered the taxpayers to take steps in action plans to adjust and cope with the changes that are to arrive. This is a wise move as the new GST model would be drastic move-away from the old traits and in order to best manage it is to have a detailed analysis and understanding of GST to find ways of grabbing opportunities, lowering risk all the while dealing with the change.

Of course, the discussion paper doesn’t mention all the details of the regulation but provided guidelines enough to make any taxpayer understand how the new policy is designed to unfold. However, aside from the minute details, the main highlights of GST are interstate transaction improvement, dual model, lowered rates, classifying and evaluating of the rate in a uniform order, etc. Currently, in the present, the GST outlines of the indirect tax submerging into one are considerably clear but what the taxpayers should heed is the impact of the long run and the changes that will come with it. For instance, excise duty tax and service tax are less likely to remain the same, and in the same way, there are other changes that are already happening such as the adjoining of tax laws and VAT^[1]. Such changes are surely creating a significant impact on the commerce industry by deciding how to levy the tax should there be a need to, and when to levy, and etc.

Effects on Business and Trade as Taxpayers

For the business and traders who have done their GST Registration, the creation of GST compliance is likely to be clear and straightforward. The GST regime is done based on a comprehensive IT system which only means the taxing services would be done digitally. GST is also set out to ensure the taxation rates and structures measure equal and common all over the country which will then increase the certainty of conducting business. In this way there will be uniformity in tax rates and structures plus the government would be creating business opportunities with neutral taxes regardless of location. The system of neutral tax credits across all the states in the country will lead to cascade removal and would ensure that taxes are being cascaded marginally. The competition among the traders and entrepreneurs would also get healthier with the reduction of group action pricings while conducting business. The incorporation of both central and state tax into one under GST will cut down the value of domestically produced factory products thereby increasing the fight for Indian services and products in the international markets and platforms and this will increase the Indian exports. This method will also lead to a reduction in compliance price.

For Central and State Governments

For the case of governments both in the central and state level, the taxing procedure will be straightforward and simpler to deal and administer. The system of multiple taxes is brought under one umbrella of GST which is based and backed with IT features to make it less complicated and easier to handle. Now instead of handling many different taxes, there would just one single large tax. With just one, the controls on the leakage will also be stronger, higher tax compliance with the backing of IT infrastructure, input credits from one stage to another decreased, associate in nursing and its inbuilt mechanism for tax compliance incentives. There will also be higher revenue income as GST is hoping to decrease the assortment value of tax revenues of the government and thus, in this way, it will lead to more inflow of revenue.

Effect on the patrons and individuals as taxpayers

As for individuals and patrons, overall there will be a clear taxing system which will be done based on the value of the goods and services rendered. At present we have the controversy of paying tax in the name of indirect taxes which has a partial or complete absence of input tax credits as attributed by central or state government and end up paying many masked taxes. With the new GST system, there will be transparency of the tax for final consumers and a single tax payable between the manufacturers and the patrons.

Finally, it would be safe to say that GST’s main impact on the taxpayers would be the relief of tax burdens, paving way for commerce gains and mitigating leakages. This will subsequently make purchasing of products by the consumer easier and cheaper because once the tax burden reduces on the commodities then the prices will also fall.

Read our article:GST Impact on E-Commerce – The vision Behind it