Need to align our thinking with changes that GST shall bring: CBEC

Goods and Service Tax (GST) is a new indirect tax regime that has been introduced in India to replace the old tax system which had several flaws. The tax system has undergone a complete overhaul with the introduction of GST, and it is essential that businesses align their thinking with the changes that GST is anticipated to bring. This article will provide an in-depth analysis of the need to align our thinking with the changes that GST is expected to bring and explore the key changes that businesses need to be aware of.

Introduction to GST

GST is a single tax that has been introduced in India to replace several indirect taxes such as excise duty, service tax, VAT, and others. The primary aim of GST is to create a uniform tax system across the country and reduce tax evasion. It is expected to streamline the tax system and make businesses more efficient by simplifying the process of tax collection and refund.

Need for alignment with GST

Businesses need to align their thinking with the changes that GST is expected to bring. The new tax system will require businesses to re-evaluate their existing tax strategies and implement new ones. There will be changes in the way businesses operate, in their accounting practices, and in the way they calculate and pay taxes. Businesses need to be prepared for these changes and develop a strategy to ensure compliance with the new tax system.

Key changes under GST

1. Registration

Under the new tax system, businesses with an annual turnover of more than Rs. 20 lakhs will be required to register for GST. Businesses that operate across multiple states will also have to register under GST. This will create a uniform tax system across the country and reduce the burden of multiple registrations and compliance.

2. Input Tax Credit

Under GST, businesses will be able to claim input tax credit on all purchases made for the business. This means that businesses can offset the tax paid on purchases against the tax collected from customers. This will reduce the tax burden on businesses and make them more efficient.

3. GST Rates

GST will have four tax rates – 5%, 12%, 18%, and 28%. The rate will depend on the type of goods or services being sold. This will create a more uniform tax system and reduce the burden of multiple tax rates on businesses.

4. E-way Bill

The E-way bill is an electronic document that will be generated for the transportation of goods worth more than Rs. 50,000. This will ensure that goods are being transported with proper documentation and reduce the incidence of tax evasion.

5. GST Returns

Under GST, businesses will be required to file monthly and annual returns. This will enable the government to track the tax paid by businesses and reduce tax evasion. The monthly returns will have to be filed by the 20th of the following month, and the annual returns will have to be filed by the 31st of December of the following year.

Conclusion

In conclusion, the introduction of GST is a significant change in the tax system of India. It is essential that businesses align their thinking with the changes that GST is anticipated to bring. The changes in the tax system will require businesses to re-evaluate their existing tax strategies and implement new ones. Businesses need to be prepared for these changes and develop a strategy to ensure compliance with the new tax system.