December 26, 2022

GST Analysis & Opinions

The Government of India implemented GST in the hopes of simplifying the country's tax structure compared to the previous regime. GST's primary goal is to create a single taxing system and remove most of the indirect taxes and combine them in different tax slab under the GST regime. The removing of indirect taxes helps in removing the difficulties in doing business therefore creating a hassle-free system. The concept of GST is operational in around 160 countries around the world. The existing threshold limit under GST is not same throughout the country. If we see the North Eastern state, it has a threshold restriction of Rs. 10 lakhs, while the rest of India has a threshold limit of Rs. 20 lakhs. Any business entity that is currently registered under another tax regime must register for GST. As per GST analysis, on the other hand, will vary because the taxing rates for industries such as manufacturing, distribution, retail, and service providers will fluctuate. Almost every predictable sector under GST has brought positive change in the Indian economy.

The Positive Changes Brought Unger GST

GST Analysis on Automobile Industry:

We need to look at the current tax system to determine how it affects the vehicle business. Previously, the automobile industry pays taxes ranging from 27 percent to 45 percent, depending on the type of vehicle, which might range from a smaller car to a large SUV. According to GST analysis the planned GST rate for the automobile sector is 18 percent, whereas the suggested rate for a luxury vehicle is only 28 percent, resulting in lower buying costs for consumers

GST Analysis

Impact of GST on Telecom Sector:

The planned GST will resolve concerns such as software categorization, SIM card classification, and franchise fee classification, among others. The abolition of dual taxation, like all other industries, is intended to help the telecom sector thrive and make doing business easier. However, the proposed GST rate for the telecom sector is 18 percent, which is higher than the previous rate of 15%.|

GST Analysis on Manufacturing sector:

GST improves India's industrial sector's competitiveness and performance. This sector is concerned about declining exports and rising infrastructure spending, to name a few issues. Multiple indirect taxes have also increased administrative expenses for manufacturers and distributors, but now that GST is in place, the compliance burden has been reduced, and this sector is expected to grow even faster. However, businesses that were previously exempt from the GST will now be required to register. As a result, there will be less tax avoidance. The cascading taxing procedure is eliminated, the GST regime is likely to help the manufacturing sector. GST also allows for seamless movement across state borders, making transportation of completed goods, raw materials, and other goods much more convenient. The manufacturing sector will most likely benefit from increased competitiveness and production as a result of the GST. The multi-taxation approach that has been widespread in many industries will be consolidated under GST, resulting in increased production and a greater focus on quality.

Impact of GST on oil and Gas:

The five essential petroleum products, namely crude, ATF, natural gas, diesel, and petrol, are exempt from the GST for the first few years in order to provide the states a good deal. Kerosene, naphthalene LPG, and other petroleum products will be subject to this regulation. Due to this peculiarity, industry would be required to conform with both the present and GST regimes, which would be contrary to the "one nation, one tax" principle. Another section in GST deals with the additional 1% non-creditable tax that the state would levy, which goes completely against the spirit of GST. This non-creditable tax is an unavoidable cost of doing business.

GST Analysis on Real Estate:

As per GST analysis the impact of GST on the real estate sector will be favorable since it will help to eliminate several taxes that are pain point for both consumers and builders. Some clauses in the model GST law limit credits on goods and services obtained for the building of immovable property, potentially resulting in more litigation. The GST is designed to aid the real estate industry by maintaining a consistent and simple tax structure.

Impact of GST on Consumer Products:

This regime is projected to lower the cost of consumer goods. The taxation amount earlier on consumer items is roughly 25-30%, while the planned GST rate is around 17-8 percent, making it cheaper. It's also designed to solve the problem of supply-chain tax evasion. GST is a boon to consumer products and fast-moving consumer goods companies.

GST Analysis on Chemical Industry:

The chemical industry has been benefitted from the introduction of GST. The chemical industry in India has long been subjected to additional levies on both consumption capacity and demand, but that ended with the implementation of GST. The lowering of CGST and SGST will result in a lower cascading effect of various taxes on chemical industries' production capacity, resulting in lower production costs and so benefiting the chemical industries.

Impact of GST on Service Providers:

There were 12, 76,861 service tax assesses in the country as of March 2014, with only the top 50 paying more than half of the total tax collected. Domains such as IT services, communications services, the insurance industry, business support services, banking and financial services, and so on bear the brunt of the tax load. These pan-India enterprises already operate in a unified market, so compliance costs will be reduced. They will, however, have to register each location of business separately in each state.

Impact of GST on e- commerce:

India's e-commerce sector has been expanding at a rapid pace. GST has assisted the e-commerce sector to continue to grow in many ways, but the long-term ramifications will be particularly fascinating because the GST law specifically recommends a Tax Collection at Source (TCS) structure, which e-commerce companies do not like. TCS has a current rate of 1%. In recent years, India's e-commerce business has experienced enormous expansion. The growth of the e-commerce industry will be aided by GST.

According to GST analysis GST helps in doubling the resources required for processing development, the country will see a reduction in poverty. The impact will be indirect because the tax base will be smaller, which will increase the Central and State governments' finance resources. GST resulted in a considerable improvement in tax governance. Each stage in the tax chain will be logged and utilised as proof for the claim, allowing taxpayers to claim input tax credit. There would be no complications in the taxes procedure because GST is overseen by both the federal and state governments. If a fault is overlooked or not detected by the state government, the central government will correct the problem when it reaches their end.


Read More: Letter of Authorization for GST, National Technical Textiles Mission, IRN: Invoice Reference Number

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