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GST TAX Benefits

GST TAX Benefits

GST is probably the biggest tax reform ever made in India, so read along to see the major benefits this could bring to your business.

GST Tax Advantages:

  • Free Movement of goods: Eliminating CST (Central Sales Tax) plus other state entry taxes, free movement of goods across the country has been enabled with the help of IGST. This means that businesses will be able to sell more in other states, helping the logistics sector save more annually.
  • Reduced costs: By applying a single tax, the cost of goods will go down. Businesses will benefit from reducing this tax burden and consumers will enjoy cheaper products. GST tax is beneficial because it only applies to value addition and removes tax cascading.
  • Easier tax compliance: The simplified tax structure results in reducing the hassle filing tax forms by merchants. All aspects from registration for GSTIN to filing monthly tax returns and payments will be managed through the online GST portal.
  • Simplified tax collection: With less tax laws, there will be less intervention from tax authorities. GST will combine all current tax departments and authorities into one, hopefully bringing more transparency.
  • Reduced Excise Duty Exemptions: The government loses around Rs.3.1 lakh crore due to excise duty exemptions. With GST, the number of exemptions offered by the government is expected to lower, thus minimizing the loss.
  • Higher threshold limit: With the implementation of GST norms, the minimum threshold limit for registration has been increased. Previously, under the VAT regime, all businesses with a turnover above Rs.5 lakh had to pay VAT. However, under this new GST regime, this threshold limit has increased up to Rs.20 lakh providing relief to several small service traders.
  • Composition scheme: Businesses who have annual turnover between Rs.20 lakh and Rs.75 lakh are eligible to lower their taxes with the help of the Composition Scheme. This option has not only lowered the applicable tax rate but has also decreased the compliance burden to a great extent. This pointer proves an essential parameter to weigh in the advantages and disadvantages of GST.
  • Lesser number of compliance: Under the previous tax regime, both service tax and VAT extended different compliances. For example, excise returns were filed monthly whereas, in the case of service tax, companies and Limited Liability Partnership were filed monthly, and partnership and proprietorship filed them quarterly. Conversely, in the case of VAT, the filing of returns varied largely. However, with GST in the picture taxpayers are now required to file only one return.
  • Hassle-free online process and reduced litigation: Taxpayers now can easily register with GST and file tax returns online. The simple interface and hassle-free approach have made the process less clumsy. It is believed that start-ups are amid the most benefited. Also, it has been proved useful in establishing clarity regarding taxation jurisdiction between State and Central government and in turn, facilitating smooth assessment.
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SalesBabu GST Billing Software can handle:

  • Sales invoices
  • Purchase invoices
  • Credit and debit notes
  • Advance payments/ receipts
  • Refund vouchers
  • Delivery Challans (for supply on approval, supply of liquid gas and other)
  • Invoices that fall under aggregate/ exempt categories
  • Amendments to invoices
  • Comprehensive place of supply rules
  • Reverse charges
  • SKU-level discounts
  • Easy-to-use E-commerce bills
  • Handle TDS and TCS declarations
  • Imports and exports
  • Auto-populate tax rates based on HSN/ SAC master
  • Auto-populate customer/ vendor details based on contact master
  • Simple Excel-like filters for efficient billing

GST (Goods and Services Tax) – It’s Meaning and Scope

GST is a destination-based, multi-stage, all-inclusive tax levied at each stage of value addition. It has successfully helped the Indian Government achieve its ‘One Nation One Tax’ agenda by replacing multiple indirect taxes in the country(India).

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The tax is levied on services and goods sold within India’s domestic boundary for consumption. GST is implemented by a majority of nations worldwide with respective customizations, it has been successful in simplifying the indirect taxation structure of India as well.

Goods and Service Tax (GST)) is collected on the final market price of services and goods manufactured internally, thereby reflecting the maximum retail price. Customers are required to pay GST on a purchase of services and goods as an inclusion in their final price. GST is collected by the seller, and it is then required to be paid to the government, thus implying the indirect incidence.

Across the country GST rates on different goods and services are uniformly applied. Goods and services have, however, been categorized under different slab rates for tax payment. While luxury and comfort goods are categorized under higher slabs, necessities have been included in lower and nil slab rates. The main objective of this arrangement is to ensure uniform distribution of wealth among Indian citizens.

What are the components of GST?

There are three taxes applicable under this system: CGST, SGST & IGST.

  • CGST 

CGST refers to Central Goods and Service Tax. It is the tax collected by the Central Government on an intra-state sale (e.g., a transaction happening within Maharashtra)

  • SGST 

SGST refers to State Goods and Service Tax. It is the tax collected by the state government on an intra-state sale (e.g., a transaction happening within Maharashtra)

  • IGST 

IGST refers to Integrated Goods and Service Tax. It is a tax collected by the Central Government for an inter-state sale (e.g., Maharashtra to Tamil Nadu)

In most cases, the tax structure under the new regime will be as follows:

TransactionNew RegimeOld RegimeRevenue Distribution
Sale within the StateCGST + SGSTVAT + Central Excise/Service taxRevenue will be shared equally between the Centre and the State
Sale to another StateIGSTCentral Sales Tax + Excise/Service TaxThere will only be one type of tax (central) in case of inter-state sales. The Centre will then share the IGST revenue based on the destination of goods.
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