Explore the Top 10 Features of GST in India: Simplifying India’s Tax Structure & Unified Tax Benefits for Business
Last Updated : July 20, 2023, 1:10 p.m.
GST is a countrywide indirect tax imposed on business enterprises aiming to make India a unified market. The unification made tax compliance effortless for business organisations and decreased the prices of numerous goods and services. The unification and the One Nation One Tax concept is one of the essential features of GST. It is a landmark tax reform that brought considerable changes in the indirect tax system in the country. The types of GST are CGST, IGST, UGST, and SGST.
The article will cover the top ten salient features of GST.
Top 10 Features of Goods and Services Tax in India
The top ten salient features of GST are as follows:
Single Indirect Tax
Goods and Services Tax is a single indirect tax, meaning you no longer have to pay numerous taxes, such as VAT, excise duty, service tax, etc. Being a single indirect tax is one of the features of GST that applies a single tax rate to products and services depending on the categorisation under HSN. The GST rates range based on the nature of the products and services and can vary from 0% to 28%.
Goods and Services Tax Composition Scheme
The composition scheme is one of the salient features of GST that lets eligible business organisations pay GST at low rates on their taxable turnover. It is a simplified tax regime applicable to small taxpayers with a turnaround of approximately Rs.1.5 crores. Under it, taxpayers can pay a flat tax rate depending on their turnover without retaining detailed records or filing daily returns. Nevertheless, a business organisation paying tax under the GST composition scheme can not claim Input Tax Credit and charge GST on the supplied products.
Input Tax Credit Mechanism
One of the major features of GST is the ITC or the Input Tax Credit letting business enterprises claim credits for taxes paid on inputs utilised in the goods and services production. Under the ITC system, the tax is imposed at every supply chain stage, i.e., from the manufacturer to the supplier, and finally borne by the consumer. The tax claimed at all stages can be claimed as an Input Tax Credit in the successive stages, exempting business enterprises that select the composition plan.
Digital Conformity and Payments
The compliance of Goods and Services Tax is digital. Digital conformity and payments are one of the essential features of GST. From registering to filing returns and paying the tax, as a taxpayer, you can perform all these actions online on the official GST official. You can pay GST with the help of Internet Banking, NEFT, RTGS, debit, or credit cards. You can even apply for refunds online. In scenarios where discrepancies are detected, you receive automated notices with a provision to reply and rectify.
Competitive Merit
The elimination of the cascading impact and the introduction of the Input Tax Credit have aided business enterprises in India in decreasing their compliance and production costs. The competitive advantage is one of the salient features of GST, which gave business organisations in India a competitive benefit in the international market, making them attractive to international investors and buyers.
Registration Exception for Small Business Enterprises
It is mandatory for each business organisation with an overall turnover of over Rs.40 lakhs in a fiscal year to be registered under GST. The limit for states in the special category is 20 lakhs Indian rupees. The benchmark limits are Rs. Twenty lakhs and Rs. 10 lakhs are in the normal category for service providers and states. Small business organisations within the benchmark limit do not require registering under GST or collecting and paying taxes.
Invoice Matching
The Goods and Services Tax System checks whether the invoice details a supplier has filed match the recipient’s invoices. Nevertheless, if there are differences in the details mentioned by the supplier and recipient, the system highlights them, and the official GST portal sends automated reminders to the concerned taxpayer. The sides involved in the transaction rectify the differences. Invoice matching is one of the salient features of GST, which may disallow ITC if the invoice details don’t match.
Tax Depending on Consumption
GST is a tax system based on consumption. It is one of the features of GST manufacturer’s state that doesn’t receive the tax collected on supplied products and services, but the state where the supplies are consumed receives it. Even though GST is charged at all stages, whenever there is a value addition to the products and services, the supplier offsets it by claiming ITC of the GST paid on the preceding stages. Finally, it is passed to the products and services’ final consumer. One of the salient features of GST is that it helps decrease the tax evasion burden because the tax is collected at all stages of the supply chain and reconciled via the GST return filing procedure.
Anti-Profiteering Precautions
Under the Goods and Services Tax System, business enterprises should pass on the privilege of a low tax rate or Input Tax Credit to consumers by decreasing the products and services costs. It is one of the features of GST that include a structure to find if consumers got the perks.
Numerous Tax Slabs
GST comprises a multi-tax structure with multiple tax rates for numerous products and services. The numerous tax slabs are 5%, 12%, 18%, and 28%. In addition, there is a 0.25% special tax slab on precious and semi-precious stones and a cess on specific products, such as luxury cars, cigarettes, and aerated drinks. It is one of the salient features of GST introduced to ease tax rates on essential products, whereas luxurious goods have high rates.
Conclusion
The Goods and Services Tax system simplified the tax structure in India. It made the tax system translucent and liable by digitising the procedure and assuring that all business enterprises follow the tax laws. If business enterprises comply with GST, they can enjoy the benefits of a unified tax system and effortless input credits. The salient features of GST have been favourable by decreasing the downward impact of taxes, leading to lower production costs. If you are still wondering about the features of GST and need clarification, this article answers your queries.
FAQs
1. Who is liable to pay GST?
The goods or service provider owes GST. Nevertheless, under the reversal fee procedure, the recipient will be liable in specific scenarios, like imports and other registered suppliers.
2. What is a primary feature of GST?
The Input Tax Credit mechanism is a major feature of GST, which lets business enterprises claim ITC or Input Tax Credit on the Goods and Services Tax paid on their expenses. It has to be claimed within the prescribed time limit.
3. What is the primary aim of GST, and what are the GST types?
Goods and Services Tax primarily aims to simplify the taxation procedure. The types of GST are UGST, CGST, SGST, and IGST.
4. What are some special perks that GST provides?
Some special perks that GST provides are as follows:
- It decreased numerous goods and services costs because of the removal of numerous taxes and the availability of ITC.
- It made Indian business enterprises and exports more competitive by decreasing the cost of production in the overseas market.
- It streamlined goods movement across states and simplified business logistics and documentation procedures.
- It enhanced compliance and decreased tax evasion due to its strong IT system for registering online, filing returns, tax payments, and refund claims.