Why would Businesses Prefer GST over Other Tax Structures?
Since the GST reform has been successfully passed and it is about to get launched sooner from 1st July, 2017 people are anxious to know what businesses will prefer. Well, a very simple answer to the query is this that GST stands for Goods and Service tax, simplifying the tax structures in India for both employers as well as individuals. Talking about businesses, GST will be simply useful to reduce the load of several return filings and in fact it will eradicate the geographical barriers for trading organizations. GST’s integration with Tally ERP will act as a great value addition for trades looking forward to automate the returns and file it if compared to manual.
Organizations preferring GST over current tax regime
Since it is a dual tax system, it’s important to understand GST’s importance. This system actually let both state and central government manage, share and collect the taxes based on the way of doing transaction. No doubt it is far different from the current tax regime but once it will come into execution, it will make the small and medium sized businesses sustain efficiently. Now, let’s pay a look at what is GST bringing in new as compared to the current tax regime.
- Today’s tax regime in India involve different laws for different taxes, whereas in GST there will be just a single law as the tax structure will include different taxes.
- Some taxes get involved in the cost as the existence of cascading effect. And in GST the burden of cost is lessened because the effect is excluded by the mechanism while providing credit.
- CST credit and the truth that most of the taxes aren’t allowed in current tax system will pave a path to spilling effect. And GST won’t give an increase to this situation because the concept of CST will be totally excluded after IGST get introduced all around.
- Present tax regime has different rates which will not be in GST as it will include only a single GST and a stable SGST across all the states.
- The current tax system charge heavy taxes on the tax paper which puts a lot of tax burden on him/her. However with the launch of GST all this will be reduced because all the taxes will be integrated while dividing the tax burden.
- Today’s scenario doesn’t empower both state and centre on this same subject matter in present tax system. But in GST both the authorities will be applauded with the power to make law on GST as the construction is permitting it to do so.
- Most of the crowd is in favour of GST as they all are stating that it is one of the best things that could happen to Indian tax system.
- According to current tax policy, the structure is quite complex as there are different laws to be followed together with necessities. In GST, the structure is enormously simplified because it will be governed just by a single law.
Thus, with so many points of clarification and a vivid statement of comparison of present CST and coming GST system, there is no scope of judging why businesses prefer GST over any other tax structure because the answer is apparent enough.