After all the ado and drama, finally it is #OnenationOnetax – GST. But what’s all the fuss about!!! The concept hasn’t changed; it is the same old VAT methodology (tax on the value addition).
But the big question is how it will affect or bring a change in the country. Well, I have tried to bring down some points on why or how it will be a big tax reform in the recent times.
- One and only compliance: Till now, the businessmen used to have lot of issues as to which are the statutory obligations to be complied with, to start up. Lot of cases are still under debate as to the purview of the act. But now, any business, just one statutory requirement – GST.
- PAN based: The service tax and excise were already linked to the income tax numbers of the assesses, but lot of other statutory departments like VAT, Luxury tax, PT, etc., are still in the process of linking the businesses with their owner PAN (especially the Old registration cases). With this facility, it can be expected that the government will be able to more effectively monitor the tax collections and identify the defaulters very easily.
- Inflation: We all have read about the inflation, a value of basket of goods against the value of same basket of goods tomorrow or value of same basket of goods in any other country. The predicted news is that the same basket of goods is going to cost you less after GST. It is expected the indirect taxes till the final point of consumption in most of the manufacturing sectors and in few other sectors is going to come down. And also the benefit of tax credit against the interstate transactions removing the cascading effect will also help. Hence, I expect the inflation rates may come down.
- Transparency: Now there being only two taxes to keep in mind for every person – income tax and GST, it can be said that the proportion of assesses willing to declare their business transactions during their self-assessments would increase. And it will be bring down the amount of unaccounted transactions and as a result, curb the Black money.
- Technological advancement: There has been quite a drastic change in the online facilities, website modification and other electronic facilities provided by most of the departments in the recent past. Hence, the same would apply at the time of GST implementation, if not better. Such facilities have helped the assesses in the doing the work simpler and faster and on the other hand, such advancement in computer application in these fields as helped the tax officials in tracking the defaulters in a more diversified manner in quick time. Thus, it would definitely help the government in better revenue collection.
- Professional cost: As the number of compliances, monthly or quarterly or yearly would be less after implementation of single tax compliance, the cost of professional work, especially in the small scale sector, would reduce and help the new entrepreneurs and encourage them.
The above write up is just the personal opinion of the author on the GST tax reform and does not state any statutory facts.
(CA Nikhil N, Bangalore- Contact: firstname.lastname@example.org)
Credits Tax Guru