Addition of 6% Tax Rate in GSTR-1 Online

Introduction

Goods and Services Tax (GST) is a comprehensive indirect tax system that has been implemented in India since July 2017. It is a destination-based tax system that has replaced various indirect taxes levied by the Centre and State Governments. The GST Council is responsible for making decisions on various issues related to the GST system, including tax rates, exemptions, and procedural changes. Recently, the GST Council has announced the addition of a 6% tax rate in GSTR-1 online. In this article, we will understand what this tax rate means and how it will impact small and medium-sized businesses.

What is GSTR-1?

GSTR-1 is a monthly or quarterly return that is filed by registered taxpayers to declare their outward supplies of goods and services. It contains details of all sales made during the relevant period, along with the corresponding taxes collected. GSTR-1 is an essential document, as it serves as the basis for the input tax credit claimed by the buyer.

What is the 6% Tax Rate in GSTR-1 Online?

The GST Council has introduced a 6% tax rate in GSTR-1 online to enable the collection of tax on non-filers. Non-filers are businesses that are required to file GSTR-1 but have not done so. The new tax rate will apply to the supplies made by non-filers, and the tax collected will be credited to the Electronic Cash Ledger (ECL) of the Government. The objective of the new tax rate is to encourage non-filers to comply with the GST laws and file their returns on time.

Impact on Small and Medium-Sized Businesses

The addition of a 6% tax rate in GSTR-1 online will have a significant impact on small and medium-sized businesses that are struggling to cope with the challenges posed by the COVID-19 pandemic. Many businesses are already facing liquidity issues, and the new tax rate will further increase their tax liability. Non-filers will now have to pay a higher tax rate, which may discourage them from filing their returns. This could lead to an increase in the number of businesses that are not complying with the GST laws, thereby defeating the objective of the new tax rate.

Conclusion

The addition of a 6% tax rate in GSTR-1 online is a significant development in the GST system. While the objective of the new tax rate is to encourage non-filers to comply with the GST laws, it may have unintended consequences for small and medium-sized businesses that are already struggling to survive. The GST Council should consider the impact of the new tax rate on businesses and take appropriate measures to mitigate its adverse effects.