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How does GST simplify the tax system?

GST or Goods and Services Tax has replaced all the multiple taxes such as VAT( Value Added Tax), Central Excise Duty, Sales Tax etc. as a single tax. With the unified single taxation system, there are uniform rules for taxation which has simplified the process of GST registration and filing GST returns. It is a significant relief for small and middle-class people in business who were pushed down with the complexities of paying taxes.

Why is GST important?

As we can look at the contrast between developed and developing countries. In the case of the developed country, there is a ratio of direct and indirect tax formated. Unlike, there is a setup of direct tax in the case of developed countries. With the help of GST, all the incidental charges are put under one roof that adds transparency. GST as a practice has brought in better trust between the companies. Therefore, the business has become smoother.

As we can look at the contrast between developed and developing countries. In the case of the developed country, there is a ratio of direct and indirect tax formated. Unlike, there is a setup of direct tax in the case of developed countries. With the help of GST services, all the incidental charges are put under one roof that adds transparency. GST as a practice has brought in better trust between the companies. Therefore, the business has become smoother.

Here is how GST has simplified the entire tax system:

  1. Simplifying the structure of GST registration: Before the coming of GST, if anyone wanted to start a new business, there were different rules and threshold limits for GST registration. For instance, companies had to register for VAT in each state, and every
  2. The state had varying rules. However, under GST, there are uniform rules for GST registration. To register as a normal taxable person, they need to do online registration and get GSTIN( Registration number) for filing GST returns and claiming the input tax credit. Also, there are predetermined limits for GST registration in each state and does not vary across states. Earlier, every state had different limits for turnover to get their GST registration mandatory.
  3. Easing the process of GST compliance: As the multiple taxes have been replaced by a single tax. Thus, the taxpayers need not get into the complexities of filing returns for these taxes. Further, there is no distinction for filing returns on goods and services as the taxes are paid on final products rather separately on services involved in the production of goods. The highlight of transformations in GST compliance is that the businesses can do online compliances with the help of software. It can help to file GST returns on time and also prevent any error in calculation. Therefore overall taxpayers can easily claim an input tax credit with the aid of this software, reducing both time and error in GST compliances.
  4. Reduction in costs: Under GST, there is a reduction in logistics as there are no post check costs involved. Earlier, individuals had to stand in long queues for paying taxes which included lengthy procedures and expenses. However, contrary to that, there is a reduction in transportation costs, and thus there is a faster movement of goods across the borders.
  5. Simplification of filing taxes: While previously, the businesses had to go through multiple departments for filing various taxes, they are no longer obligated to experience harassment of paying returns in each state. It, therefore, helps to save time and efforts for filing taxes. Also, with the new taxation regime, the entire process is performed online. From GST registration to GST compliance to filing GST returns to claiming GST refunds you can do it online all by yourselves. GST registration can be completed within three days if all the documents are ready. Also, you can file self-declaration claims for getting GST refunds under the specified limits.
  6. Easing rules for small business: If a business has a turnover between below Rs 20 lakhs, they do not need to do GST registration and are thus exempted for GST registration. They can also opt for the composition schemes to get several gst benefits. More Businesses are becoming tax-exempt. A more significant advantage of GST is that businesses who are earning up to Rs 10 lakh annually don’t need to file GST return. As per the rules of the old company, every company that made more than Rs5 Lakh had to file a tax return. The process would require to carry forward a detailed registration process, and solid tax policy is taken into action.
  7. Easier Compliance
  8. With the GST in place, it has created a new road for the SMEs. The old system is being trashed, and instead, a new system is being set in place. People are now able to take risks and can start with their business plans. There is a scope for entrepreneurs to earn more by gaining more financial independence.
  9. Businesses Pay Less Tax under GST
  10. There is another advantage associated with GST. Companies now need to pay less tax as they used to pay more. The best example to quote is about GST versus Vat. The earlier tax system was around 32 percent. Now, it has cut down and reached a level of 18-22 percent. Also, the business is not required to pay multiple numbers of taxes. The tax system has become easier to follow and carry from now on.
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Conclusion: Thus, with the online GST registration and filing returns, there is a minimal manual interface for procedures of GST, thus reducing the costs and complexities in the tax system. Also, there is a seamless movement of goods and services across the states with the coming of GST. However, one cannot neglect the fact that the small businesses are not comfortable with online processes of GST and face complexities with online software.

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