The much talked about GST (Good & Services Tax) has now become a reality. For corporates, the elimination of multiple taxes will improve the ease of doing business. And for consumers, the biggest advantage would be in terms of a reduction in the overall tax burden on goods.
Here’s a list of points on how this new tax would affect the common man –
- The biggest change-inceptor in GST is the input-credit-tax, where credits of input taxes paid at each stage of production or service delivery can be availed in the succeeding stages of value addition. This means that the end consumer will thus only bear the GST charged by the last point in supply chain, with set-off benefits at all the earlier stages.
- To ensure that manufacturers and service providers pass on the benefit to the final customer, the government has included an anti-profiteering clause in GST. Under this, it becomes mandatory to pass on the benefit of tax reduction due to input tax credit to the final customer.
- Petroleum products such as petrol, diesel and aviation turbine fuel have been kept out of the provision of this tax as of now. The tax Council will take a decision on it at a later date. Alcohol has also been kept out of this tax scheme.
- Small traders with annual turnover less than Rs. 20 lakhs are exempt from GST registration. In further relief to small businesses, under the composition scheme, they will benefit from not having to meet with detailed compliances under GST. However, they will not get the benefit of input tax credit. If businesses opt for the composition scheme, traders with turnover below Rs. 75 lakhs will have to pay 1 per cent tax on turnover. Manufacturers will have to pay 2 per cent while restaurant businesses will have to pay 5 per cent.
Hope GST serves you well!
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