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Some facts about GST you should be aware of

  • Editor
  • June 29, 2017
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From 1st July, India would be starting a new chapter in its financial history after the Goods and Services Tax (GST) rolls out. There would be many challenges, which both the business owners and the government officials have to face, chief of which is having to adjust to the new taxation norm that does away with indirect taxes like service tax and excise duty among others. The going might be tough for the initial 2-3 months and it is imperative that all those required to comply with GST regime go around learning about all the changes and inculcating them without any sort of panic.

While there is always a resistance to change, what is not helping the matter at all is the misconception and propaganda being spread by some in the “commentariat”, who while possibly seeking to discredit the GST, might end up piling unnecessary panic among thousands of ordinary businessmen and taxpayers. These comments give a sense that businesses might end up investing a lot of resources, especially man-hours, in just compliance.

One of the aspects that are scaring many is the claim that every company needs to pay 3 tax returns per month i.e. 36 tax returns per year, which will warrant a lot of paperwork and investment of man-hours. The fact is that the tax-payer has to only file one return per month and the rest of the details get auto-populated. The only return that involves actual data entry is your outward return, which will be easy to do if your account keeping is orderly and systematic. The returns that get auto populated is your inward return, which fetches data from the return filed by your supplier. The other return that is auto generated is your monthly return, which fetches data from your outward return, which you fill in, and the inward return, which gets auto-populated. All these monthly returns would then be added on while creating an Annual return.

Currently, businesses need to file CST or central sales tax returns. Then they need to file VAT returns as per the laws prescribed by the state, which in most cases differed from state to state. So if a company operated in 20 states, it would have to keep in mind the 20 different VAT laws, and in order to do so appoint different consultants who have the knowledge of each state law before filing the return in each state. On top of it, there used to be entertainment taxes, road taxes, and others such taxes, which differed from the state to state.

In the post-GST era, if a company is operating in 20 different states, it still has to file returns in each state as per the turnover slab it falls into. However, GST does ensure that all the state laws like VAT, entertainment tax, road tax, etc. which were different in each state, have been subsumed by a centralised GST law. Hence the company, while filing the returns, can very well refer to that single law to get things done rather than going through different state laws.

So no more needing to appoint state specific experts for simple tasks like transporting machinery from one state to another, which earlier required the filing of road taxes in both the states having completely different road tax laws. Now just learn the GST law and you are good to go for everything.

From 1st July, India would be starting a new chapter in its financial history after the Goods and Services Tax (GST) rolls out. There would be many challenges, which both the business owners and the government officials have to face, chief of which is having to adjust to the new taxation norm that does away with indirect taxes like service tax and excise duty among others. The going might be tough for the initial 2-3 months and it is imperative that all those required to comply with GST regime go around learning about all the changes and inculcating them without any sort of panic. While there is always a resistance to change, what is not helping the matter at all is the misconception and propaganda being spread by some in the “commentariat”, who while possibly seeking to discredit the GST, might end up piling unnecessary panic among thousands of ordinary businessmen and taxpayers. These comments give a sense that businesses might end up investing a lot of resources, especially man-hours, in just compliance. One of the aspects that are scaring many is the claim that every company needs to pay 3 tax returns per month i.e. 36 tax returns per year, which will warrant a lot of paperwork and investment of man-hours. The fact is that the tax-payer has to only file one return per month and the rest of the details get auto-populated. The only return that involves actual data entry is your outward return, which will be easy to do if your account keeping is orderly and systematic. The returns that get auto populated is your inward return, which fetches data from the return filed by your supplier. The other return that is auto generated is your monthly return, which fetches data from your outward return, which you fill in, and the inward return, which gets auto-populated. All these monthly returns would then be added on while creating an Annual return. Currently, businesses need to file CST or central sales tax returns. Then they need to file VAT returns as per the laws prescribed by the state, which in most cases differed from state to state. So if a company operated in 20 states, it would have to keep in mind the 20 different VAT laws, and in order to do so appoint different consultants who have the knowledge of each state law before filing the return in each state. On top of it, there used to be entertainment taxes, road taxes, and others such taxes, which differed from the state to state. [ads1] In the post-GST era, if a company is operating in 20 different states, it still has to file returns in each state as per the turnover slab it falls into. However, GST does ensure that all the state laws like VAT, entertainment tax, road tax, etc. which were different in each state, have been subsumed by a centralised GST law. Hence the company, while filing the returns, can very well refer to that single law to get things done rather than going through different state laws. So no more needing to appoint state specific experts for simple tasks like transporting machinery from one state to another, which earlier required the filing of road taxes in both the states having completely different road tax laws. Now just learn the GST law and you are good to go for everything.

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