Top 10 salient features of GST
- Unified tax structure: GST replaces multiple indirect taxes with a single system, streamlining compliance and reducing costs for businesses and consumers.
- Three tax types: CGST, SGST, and IGST divide tax responsibilities between the Centre and States based on whether the supply is intra-state or inter-state.
- Four-rate system: GST applies rates of 5%, 12%, 18%, and 28% depending on the goods or services. Essential items attract lower rates, while luxury items fall under higher slabs.
- Input tax credit: Businesses can claim credit for the GST paid on inputs and adjust it against their output liability, reducing double taxation.
- Composition scheme benefit: Small businesses can pay tax at reduced rates and file fewer returns, though they cannot claim input tax credit under this scheme.
- Invoice data matching: GST return filings match invoices between buyers and sellers to verify input claims and flag mismatches automatically.
- Destination-based tax: GST is collected in the state where goods or services are consumed, not where they are produced, ensuring fair revenue distribution.
- Registration threshold exemption: Small businesses with turnover below Rs.40 lakh (or Rs.20/10 lakh for services) are not required to register for GST.
- Anti-profiteering rules: Businesses must pass on benefits from tax rate reductions or ITC to consumers; failure to do so invites regulatory scrutiny.
- Online compliance system: GST processes such as registration, return filing, payment, and refunds are fully digitised, improving convenience and transparency.
If you’re already managing GST-compliant operations, now is a good time to check your pre-approved business loan to fund your next expansion.
Benefits of GST
Benefit
|
Description
|
Simplified tax structure
|
GST replaces multiple indirect taxes with a single, unified tax system, reducing complexity in tax compliance.
|
Reduction in prices
|
Eliminates the cascading effect of taxes (tax on tax), which lowers the final price of goods and services, benefiting consumers.
|
Ease of doing business
|
A uniform tax rate across the country simplifies business operations and reduces administrative costs.
|
Increased transparency
|
Digital tax filing, e-invoicing, and automated processes enhance transparency and reduce opportunities for tax evasion.
|
Input Tax Credit (ITC)
|
Businesses can claim credit for taxes paid on inputs, reducing their overall tax liability and encouraging better compliance.
|
Boosts exports
|
Zero-rated exports under GST make Indian goods and services more competitive in international markets by avoiding tax on exported goods.
|
Improved logistics
|
The E-Way Bill system ensures smooth movement of goods across states, reducing delays and costs associated with logistics and warehousing.
|
Higher revenue
|
Efficient tax collection and compliance lead to higher tax revenues for the government, enabling better public services and infrastructure development.
|
Economic growth
|
By reducing the overall tax burden and streamlining processes, GST boosts economic activities, investments, and GDP growth.
|
Formalisation of economy
|
Encourages businesses to register and comply with tax norms, increasing the formal economy's size and improving the business environment.
|
Enhanced competitiveness
|
Uniform GST rates across states eliminate tax disparities, ensuring a level playing field for businesses, and thus fostering fair competition.
|
Preventing tax invasion
|
Mechanisms like input tax credits, invoice matching, and digital records reduce the chances of tax evasion, promoting a more honest business culture.
|
Better compliance
|
Simplified tax processes and online filing systems make it easier for businesses to comply with tax regulations, reducing the likelihood of penalties and legal issues.
|
Consumer benefits
|
Lower prices and increased transparency ensure that consumers benefit from fair pricing and improved quality of goods and services.
|
Job creation
|
Increased business activities and investments due to GST's favourable environment lead to job creation and higher employment rates.
|
How GST features influence the functioning of the GST calculator
The features of GST, such as its multi-rate structure, input tax credit mechanism, and destination-based nature, directly influence how a GST calculator estimates tax liabilities, helping businesses compute accurate payable amounts and claim eligible credits efficiently.
Suggested Interlinking: GST calculator
Get the funds you need with Bajaj Finserv Business Loan
For those needing financial assistance to invest in technology upgrades or manage operational costs, a business loan can provide the necessary support:
- Rapid disbursement: Funds can be received in as little as 48 hours of approval.
- Simplified application process: Online applications streamline the process, reducing paperwork and saving time.
- High loan amount: Businesses can borrow funds up to Rs. 80 lakh, depending on their needs and qualification.
- No collateral required: You do not have to pledge any collateral to get our business loan.
Conclusion
GST has revolutionised India's taxation system by simplifying tax processes, enhancing transparency, and promoting economic growth. It benefits businesses by reducing costs and improving efficiency. For businesses seeking to manage compliance costs or expand their operations, a business loan can provide the necessary financial support. However, before applying for a business loan, it’s important to compare business loan interest rates to make informed financial decisions.
