BENGALURU: With the news of Government rolling out Goods and Service Tax this year, a lot of discussions have been taking place around the city.
NUMA Bengaluru a leading innovation hub organized an event in association with clearTax an Indian tax return platform, on January 19. A Chartered accountant by profession and also an expert in GST, Shubham Khandelwal, summarized how GST would be beneficial for the common man and Start-ups in India.
It is known to us that the intention of introducing GST is to reduce indirect taxes and merge all the existing taxes in single system of taxation. With GST as an amalgamation of central and state tax it looks forward to mitigating double taxation and facilitating the whole nation as one huge marketplace for transaction and business.
Shubham said, “GST is a single level, one shot tax regime which is easy and less cumbersome. It will be like not paying tax but actually paying taxes in other way to the government”. He also said how the introduction of GST is a welcomed tax plan which reduce the price of goods and would increase sales and consumption which would in a way generate employment for production. And this introduction of regime would be uniform across the country.
This would also mean that the multiple taxation system like state sales tax, CENVAT, entry fee into another state will dissolve and everything will be clubbed under GST. Although, GST seems to be pretty simple but it is not. What happens in GST is every businessman is supposed to register themselves under GST-N (GST-Network). This registration has to be from where the business belongs, but if the business grows to another state, the businessman has to register again. So basically each time the business grows the person keeps registering. An e-commerce start up in that case needs to have 29 odd registrations in India, which is cumbersome.
However, this method would allow GST registered business to claim their tax credit to the value they paid on purchase of goods and services as a part of their normal activity. But they have to claim this with the invoice that has been produced.
As simple as it seems, GST is divided into 3 components that everybody needs to know. Mr Shubham said, “There are 3 components: CGST, SGST and IGST. The CGST is covered under central goods and service tax like excise duty, service tax. SGST is collected under state tax and would include, entertainment tax, luxury tax, entry tax and IGST tax will be divided between central and state government. IGST would be charged on transportation of goods inter-state across the country.”