Major Benefits of GST (Goods and Services Tax) in India

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March 30, 2019

Benefits of GST

The Goods and Service Tax is one of the biggest pecuniary reforms in India since from Independence. The big question for everyone is that what will be the benefits of GST in India? All businesses, whether it is small or large, will be affected by the implementation of GST Regime in India.

GST will be levied separately on both goods and services.  The GST has replaced all indirect taxes such as excise duty, custom duty, VAT, service tax and so on.

Benefits of GST in India are Given Below:

Benefits of GST in IndiaRemove Cascading Tax effect: Removal of Cascading Tax effect is one of the major benefits of GST in India. ‘Cascading tax effect’ simply means the tax on tax (double taxation). Removing cascading tax effect means taxes will not be levied at each stage of the supply chain. Due to cascading effect, it reduces the overall price of goods.

Luxury Cars Getting Price Cut: The luxury car makers in India will pass on the benefits of GST to their valuable customers. The buyers of the top brands can now expect a price cut of up to 4-6% and a significant reduction in price in between Rs 1.5 lakh-Rs 7 lakh. The favour will be done on the car models are being locally assembled in India.

Meanwhile, Mercedes-Benz India has also announced the price drop of up to 4 percent on immediate effect on its locally produced lineup in India. The price drop will vary from one state to other in the range of 2% and 9%.” It will also depend on the current tax structure and local taxes”, the company clarified in a statement.

Recommended Post: GST impact on Car Prices

Given that this will mean customers withholding their purchase till the GST advantages roll out, the company is passing on “the transactional benefits to customers at an earlier stage to drive value in their purchase decisions”. The price benefit will include all India-assembled models, including the GLA, C-Class, E-Class, SClass, GLC, GLE, GLS and Mercedes-Maybach S 500.

The BMW has also reduced that interest rates at 7.9%, complimentary 3 years service and maintenance, free one-year insurance and guaranteed buyback for up to four years in addition to GST benefits.

Composition Scheme for Small Businesses: Small Businesses whose turnover lie in between Rs. 20 to 50 lakhs can register under the Composition Scheme. Composition scheme reduces the tax burden of several small businesses in India.

Also Read: Benefits of GST on Small Businesses

Standardized Tax: The GST in India has replaced approximately 17 indirect taxes such as excise duty, custom duty, VAT and so on levied by the Central and State Government. GST will reduce compliance costs and follow a simple taxation structure system.

Reduction in Inventory and Logistic Costs: The Logistics and Inventory costs will reduce after the implementation of GST in India. Currently, the checking of goods at state borders slow down the movement of goods or trucks. Due to lower logistics and tax costs, manufacturing of goods could become cheaper.

Businesses had to maintain several warehouses or logistics center across India, to keep away from the Current Sales Tax (CST) and state entry taxes on inter-state movement. Generally, warehouses were forced to minimize their capacity which increases the operational costs of businesses.

E- commerce: E- Commerce is one of the sectors which has been negatively affected due to the different state restrictions and online levies. E- commerce sellers are facing the problem because different states have different laws/ levies. Due to that restrictions, some seller’s (e-commerce) are not able to ship their products to particular states.

For example, e- commerce websites (like Flipkart and Myntra) delivering goods to Uttar Pradesh must have to file for VAT declaration and the registration number of the delivery truck. Sometimes tax authorities can take hold of goods at when there is a failure to produce documents. The introduction of GST will end this issue.

Recommended Post: GST Return Filing Process for E-commerce Sellers

End- Consumers Benefited: End- consumers will be benefited in the long run due to the implementation of GST in India. Lower tax burden may result in lower prices of goods and services that will be the advantage of GST.

Regulate an unorganized sector: Several Industries in India such as construction and textile are unorganized and unregulated. Through GST, it provides online compliances and payments, availing of input credit only when the supplier has accepted the amount. GST brings accountability and regulation to the above industries.

The simple online process of GST: The whole process of GST would be done through online, starting from the registration until filing returns and payment of GST tax. Startups, Businesses or Taxpayers, don’t need to go tax office for various registrations of VAT, service tax or filing returns.

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