GST(Goods and Services Tax) has made the tax collection efficient and uniform all over the country. Before GST act, the taxes could not be collected uniformly. There was VAT and other state taxes which created a lot of chaos and tax evasion was rather easy thing to do. In addition to that the taxes were separate for each state and hence it was cumbersome to manage them and pay at correct time. It was also at the whims and fancies of the tax collectors. So, the revenue was very difficult to reach to the treasury of the Government. Keeping in view the low revenue and fiscal deficit which refrains to diminish, the government needed to step up to generate some revenue and stop the leakages of the system in the form of laxity in collection of taxes in the form of VAT, excise, etc.
Government has pushed GST to make reforms in the economy and to make tax collection easy. But, it has added undue compliant regulation to the companies thereby making them undergo many changes in their functioning in order to meet the regulatory issues. Especially, the small businesses and traders are affected by these changes, as they have to comply to an entirely new set of norms with different needs and expertise required to handle the compliance. However, the threshold limit of business for paying taxes which was 5 lakhs under the VAT is now increased to 20 lakhs under GST. In addition to that, the smaller businesses get relief under the composition scheme.
Some of the Benefits Often GST Act can be enumerated as:
1. Increase in Tax Base- Under the VAT taxation system, some industries like construction and textiles were largely unregulated and unorganised. These sectors have also been asked to be GST compliant with a certain tax rate.
2. Formalising Indian Economy- As more and more traders are coming under the purview of the taxation system, the economy is getting formalised and compliant.
3. Removal of Multiple Taxes- Earlier, at every stage of the manufacture, value being added to goods or services,there was a tax to be paid to the state authorities concerned. This was under VAT/ Excise Regime. However, under the GST Act, these taxes have been unified and to be paid on expenses. So, the GST that the Trader/company pays, is actually a collection of taxes that the end consumer is paying and the company is transferring that amount to the government.
4. Minimum Government and Maximum Governance- The tax authorities have achieved the role of supervision only instead of any regulatory operational function. This has made the system smooth and easy to function.
5. Ease of Compliance- The GST needs to be filed online and hence there is one portal to log and file the returns without bothering much about the tax officers and their whims and reservations.
6. Promote MSME- The government is offering a lot of help to the MSME sector, thereby often reducing the tax burden on the small players.
7. Buoyancy Rate- Buoyancy rate means the measure of effectiveness and efficiency in the growth of revenue through tax collection.
8. Prevent Tax Evasion- Due to transparency in the system, there is less tendency of tax evasion by the companies and traders. They need to be GST compliant as there is a very efficient system to monitor their compliance.
9. Improving the Efficiency of Logistics- The movement of goods are not entitled for taxes at every stage of their movement thereby decreasing the cost of operation of many firms which involve the transport of goods from one state to another.
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