In 2017, the Indian government introduced a revolutionary tax system called the Goods and Services Tax (GST). GST is a comprehensive tax system that replaced multiple taxes like VAT, excise duty, and service tax, among others, to simplify the taxation process for businesses. With GST, businesses can now file their tax returns online, reducing the need for physical paperwork and making the system more transparent.
However, GST compliance can be a daunting task for small and medium-sized businesses (SMBs) and startup founders who may not have the resources to navigate the complexities of the tax system. To ease the burden on taxpayers, the government has introduced several friendly GST provisions that make it easier to comply with the tax regulations.Here are some of the friendly GST provisions for a taxpayer:
The compounding scheme is a voluntary option available for small taxpayers who have a turnover of up to Rs 1.5 crore. Under this scheme, taxpayers can pay their taxes at a fixed rate without going through the complicated GST return filing process. They can file their returns once every quarter instead of monthly, thus reducing the compliance burden.
Composition levy is another scheme available for small taxpayers with a turnover of up to Rs 1.5 crore. Under this scheme, taxpayers can pay a fixed percentage of their turnover as GST and file quarterly returns. This scheme is available for businesses dealing with goods and not services.
In a normal GST transaction, the supplier is responsible for paying the tax on the goods or services supplied. However, in the case of reverse charge mechanism, the responsibility of paying the tax is transferred to the recipient of the goods or services. This provision is applicable only for specific goods and services, and it reduces the compliance burden on the supplier.
Under GST, the transportation of goods worth more than Rs 50,000 requires an e-way bill. The e-way bill is an electronic document that contains details of the goods being transported. It is generated online and is valid for a specific period. This provision helps in tracking the movement of goods and reduces tax evasion.
GST registration is required for businesses with an annual turnover of more than Rs 20 lakh. However, a business with operations in multiple states would require multiple GST registrations. To ease the burden on businesses, the government has allowed a single registration for businesses with operations in multiple states, reducing the compliance burden.
Under GST, businesses can claim input tax credit on the tax paid on the goods and services purchased for their business. This credit can be used to offset the tax liability on the goods and services sold by the business. This provision reduces the tax liability on the business and makes the system more transparent.
Under the GST system, businesses are required to file three returns every month. However, to reduce the burden on taxpayers, the government has introduced a simplified return filing process. Now, businesses with a turnover of up to Rs 5 crore can file quarterly returns instead of monthly returns.
GST has simplified the tax system for businesses in India. The friendly GST provisions introduced by the government have further reduced the compliance burden on small and medium-sized businesses and startup founders. These provisions have made it easier for businesses to comply with the tax regulations and focus on their core operations. With the help of technology, businesses can now file their tax returns online, reducing the need for physical paperwork and making the system more transparent. The Goods and Services Tax (GST) is a comprehensive tax system that replaced multiple taxes like VAT, excise duty, and service tax, among others, to simplify the taxation process for businesses. To ease the burden on taxpayers, the government has introduced several friendly GST provisions that make it easier to comply with the tax regulations.
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