(ONE INDIA ONE MARKET)
On continuation of my last article on ‘’Goods And Services Tax’’ I want to give further explanation about the benefits of ‘’Goods And Services Tax’’ to manufacturer and retailers.
Now a day the taxation system is like that, a manufacturer needs to pay tax when a finished product moves out from the factory and such product is again taxed at retail outlet when sold. Under GST it is expected to build a transparent and corruption-free taxation system. GST will be levied only at the destination point, not at various points starting from manufacturing to retail outlet.
Following are the benefits of GST to manufacturer and traders along with comparison between pre and post GST scenarios:
1. Combination of many taxes: Currently around 16 taxes like: VAT, CST, Entertainment tax, Excise duty, Service Tax, Additional custom duty(CDT), Special Custom Duty(SAD) etc. are there in market. GST will charge on the basis of Subsuming of all these taxes.
2. No difference between Goods and Services: Now a day tax is charged at different rates on Goods and Services. Under GST there is a single tax rate for goods and services.
3. One India one market: Due to current taxation system goods are being sold within state to avoid central sales tax and entry tax which not good from the view of growth. On introduction of GST all such taxes are removed and there is a unified market.
4. Made invoices simpler: Now, the invoices are complex since, goods and services are taxed separately. GST will make invoices more simpler as tax is charged at single rate.
5. Reduce delivery time: The Economist November 8, 2014 has reported that India's long distance truckers are parked 60 per cent of the time. This also leads to delaying of delivery of goods at destinations. The abolition of entry tax will be a great boon for the movement of goods by road transport.
6. Greater transparency: Unlike the present sales tax, consumers would benefit under GST as they will know exactly whether the goods they consume are subject to tax and the amount they pay for.
7. Increase global competitiveness: Prices of India exports will become more competitive on the global stage as no GST is imposed on exported goods and services, while GST incurred on inputs can be recovered along the supplies chain. This will strengthen our export industry, helping the country progress even further.
8. Reduces red tape: Under the present taxation system businessmen must apply for approval of tax free materials and capital goods. On application of GST this system is abolished as businesses can off set automatically the GST on inputs in their returns.
Conclusion: All the above points are true if GST will applicable in an ideal manner and covers all goods and services.
Written by: Vivek Chaudhary
Mail Id:vc56764@gmail.com
Currently Working: Rpmd & Associates
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