date_range 09 Apr, 2020

GST (Goods And Services Tax) – How It Can Impact Businesses And Individuals

GST or the Goods and Services Tax, acclaimed as the most revolutionary tax reform in the country after independence is expected to control transactional costs. The unified tax system can give economic growth a major fillip in the long run says experts.

Almost all types of businesses pay tax in some form or the other apart from income tax. Businesses are required to pay indirect taxes such as VAT, service tax, excise duty and others. GST will replace all types of indirect tax. It must be noted that GST does not simply mean a change in type or form of tax. It will completely overhaul the current indirect tax structure scenario in the country.

### **If Your Business Makes A Supply, You Are Liable For GST**
The Place of Supply of goods and services is the key to the tax it will attract. A supply of goods and services can be deemed as having happened even without an actual sale and includes transfer, rental, lease, exchange, and barter or supply made to a branch or an agent. If your business is involved in all or any of these, you will have to pay GST. It must also be borne in mind that the government has notified some goods and services that does not qualify as a supply and hence will not be liable for GST. You will therefore have to first identify if your business has made a supply.

Once it has been established that your business involves making a supply, the next step is to find out if the supply is intra-state or inter-state supply. If the origin state and the destination state are different, it is considered an inter-state supply. In such a scenario, the supplies will be taxed at the rate of the destination state. Intra-state supplies will attract central as well as sales levy known as CGST and SGST respectively.

### **The Various Scenarios**
GST is not applicable to any supply made outside India. However, companies doing such businesses may still require GST registration. Sales that happen Intra-state will attract SGST and CGST and inter-state sales will attract IGST. According to the authorities, IGST, which will be also levied on imports to the country, will be the sum total of CGST and SGST.

For companies supplying intra-state, GST registration must be done separately in every state where it has a presence. It will have to pay both of CGST and the respective SGST. If the place of supply is inter-state, registration must be done in the state of origin and IGST availed in the other states involved. That’s why it becomes critical for businesses to register correctly so that they can levy the correct taxation rate.

Coming to the real reason why the Government went out of its way and left no stone unturned to implement GST nation-wide within the decided deadline. It is apparent that GST will benefit all the players and in multiple ways. Here are some of the benefits:
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**Here are some of the key benefits of GST:**

- By including a wider base of goods and services within its ambit, GST will cover the GDP more comprehensively.
- Cascading taxation or multiple taxation can be eliminated and a single indirect tax regime can be implemented
- As the tax process will be highly standardized and automated, there will be no direct interaction between the tax payers and authorities.
- The whole tax system can become transparent and accountable
Of course, there are drawbacks too with GST.

**The key downsides of GST:**

- The presence of four tax slabs for a system that claims to represent a unified tax regimen is something that belies logic and practicality
- Multiple slabs may create confusion and lead to evasion situations
- Tax rates are on the higher side when compared to other countries that have implemented GST
Bringing the grand idea of ‘One Nation, One Tax’ to reality has succeeded as far as the rolling out is concerned. Its implementation and execution will be watched closely by the world as this ground-breaking tax legislation will have major impact on every citizen, and will affect business finance and personal finances too.

**Author** :-Vijay Raj

_This Content does not necessarily reflect the opinion of the editorial board or Instafeed and its owners_

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