Implemented in July 2019, a new tax law named GST had been proposed with a primary aim of eliminating indirect taxes in India and bring forth a unified taxation system. This tax is imposed on the supply of goods and services across the country.
Apart from knowing what is GST, individuals must know about the different types of GST and how they function separately for the different supplies of goods and services. Following are the types of GST-
- CGST
- SGST
- IGST
- UGST
It is mandatory for every consumer, seller and service provider to register their business under GST to avoid any legal hassles in the long run. Hence knowing the GST meaning is essential for businesses of all statures.
Although GST brings transparency, accountability and reduced tax compliance, it also significantly changed the overall taxation system.
- With the implementation of GST, several indirect taxes such as VAT, excise duty, service tax etc., have been eliminated and majorly subsumed into one. It significantly reduced the tax compliance on individuals.
- Under old tax regime, taxpayers were unable to deduct tax credits of one tax against another. But under GST, tax is imposed on the net value at each stage of supply chain.
- With the introduction of GST, individuals are eligible to claim an input tax credit on the raised invoices by the respective suppliers. This way, there will be no chances of claiming input tax credit on fake invoices.
- Previously, there was a different threshold limit for registration depending on the business’s turnover. Being a consolidated tax, it has increased business under the taxation system.
Thus individuals planning to expand their business must know that they can secure business loan easily if their business is registered successfully under GST. Hence, introduction of GST simplified the overall taxation process in India.
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