A Quick Recap of GST India Series

As India stands on the brink of its biggest transformation in the tax reforms- that is the implementation of the Goods and Service Taxes “GST”, this week, we brought you a dedicated study series named ‘GST India.’Read the entire GST India series: https://www.digitalerra.com/tag/gstindia/

Here is a quick recap of it!

What is GST?

GST is a comprehensive indirect tax on manufacture, sale and consumption of goods and services throughout India to replace taxes levied by the central and state governments.In short, GST will take place of all indirect taxes to create a single market.

Why was it needed?

VAT rates and regulations differ from state to state. And it has been observed that states often resort to slashing these rates for attracting investors. This results in loss of revenue for both the Central as well as State government.

On the other hand, GST brings in uniform tax laws across all the states spanning across diverse industries. Here, the taxes would be divided between the Central and State government based on a predefined and pre-approved formula. In addition, it would become much easier to offer services and goods uniformly across the nation, since there won’t be any additional state-levied tax.

When is GST levied?

The most important thing about GST then is its point of levy. Under GST, point of tax levy is ‘supply’. What constitutes a supply has been defined in the GST Act. Supply means sale of goods and services. A supply of goods and services can take place even without an actual sale. Supply will also include, transfer, exchange, and barter, rental, lease and also a supply made to an agent or to a branch. So if you are a business, engaged in any of the above, GST will replace all taxes paid by you on purchases, and mandate you to levy GST on your supply. In this context the government may notify some services & goods, which will not be considered a supply and hence will not attract GST. So the first step would be to identify if your business has made a supply.

Which businessverticals would it impact?

GST defines “business vertical” as a distinguishable component of an enterprise that is engaged in supplying an individual product or service or a group of related products or services and that is subject to risks and returns that are different from those of other business verticals.

Businesses getting impact include but not limited to are eCommerce, Retail, Startups, etc. Learn comprehensively about them here:

• Easy Guide to GST Implications on eCommerce

Understand the effect of transition on eCommerce player from the current model of indirect tax to the uniform model given by the GST. Implications such as Tax Collection at source, Compliance issue in case of returns and refunds, Removal of Cascading taxes and more have been lucidly explained. Read more: https://www.digitalerra.com/easy-guide-to-gst-implications-on-ecommerce/

• Overall Impact of GST to Retail ecosystem

Let us focus on Goods and Services Tax’s impact on the Retail sector. Factors shaping the retail sector include Increased availability of input tax credit, Increased working capital requirement and Critical issues in trade incentive and discounts, among others have been defined here. Read more: https://www.digitalerra.com/overall-impact-of-gst-to-retail-ecosystem/

• GST Could See Minimal Impact On Retail Inflation

We analyse a report by Morgan Stanley that says GST will not stoke retail inflation.Most of the tax rates for items in the CPI (Consumer Price Index)basket are likely to be taxed at a lower rate. Also, see the expert voices on the scenarios impacting retail inflation in India. Read more: https://www.digitalerra.com/gst-could-see-minimal-impact-on-retail-inflation/

• GST Brings Good News for Startups

Know the many good implicationsof GST on the health of startups. Startups can heave a sigh of relief with new norms like Tax credit on purchases, Simpler taxation, increased efficiency in logistics, among others. Read more: https://www.digitalerra.com/gst-brings-good-news-for-startups/

Which categories are the main beneficiaries under GST?

The main beneficiaries of the new goods and services tax, due to be rolled out on 1 July 2017, include steelmakers and some consumer goods, though personal care items including sanitary ware will be taxed at the top rate, along with appliances such as air conditioners.

Learn more on the rates fixed for Textile Manufacturers below:

• Understanding GST Rates for Textile Manufacturers

Know the textile products taxed at 12%, 18% and 28% respectively. Plus, learn how a uniform 5 per cent GST can benefit the overall textile ecosystem. Read more: https://www.digitalerra.com/understanding-gst-rates-for-textile-manufacturers/