GST Amendments and Its Effects on Business in India
Goods and services taxes (GST) came into effect from July 1st, 2017. The main objective was to simplify everything, including the tax structure, the rates, and compliance needs. The Indian government imposes GST is a single indirect tax to replace the multiple tax system levied by both the state and central government. The tax rate has now been classified into different slabs, such as 0%, 5%, 12%, 18%, and 28%, depending on the nature of goods. This structure has helped to rectify the issues created by the earlier tax system. An analysis after one year revealed that GST implementation has proven to be fruitful. This positive success has encouraged the council to bring up certain relevant GST amendments like reducing the earlier tax rates.
The Impact of GST Amendments
The following are the major updates about the amendments:
- Streamlining the return filing process: The turn over the limit sets to 5 crores from the earlier 1.5 crores for filing the quarterly return to simplify the process of GST filing.
- Amended return to have no extra charges: The taxpayer can now file amendments on the return through the GST amendment return. It provides relief to him since he does not have to pay extra interest.
- Lowering compliances: The lowered compliances goal is to lessen the load on the IT system, which used to crash earlier. Efficiency in work will increase by this step.
- Many businesses registrations allowed within the same state: Under the new amendments, registration of many businesses in a single state is now easy.
- Implemented Radio Frequency Identification(RFDI) tags: A lot of human labour and time investment has a requirement to check the transported items on the check posts. RDFI tags and E-way bills are being adopted, which will help to reduce waiting time for the transporters.
- Many categories are getting relief on GST: The below-mentioned categories will enjoy relief from GST taxation:
- Pension, old-age support, and social security
- Training, education and skill development
- Food processing, farming, and agriculture sectors
- Forming GST appellate tribunal: The population of India is huge. Regulation of the mass tax system is quite difficult. With the headquarters established in New Delhi, GST appellate tribunals are to be set all over the country. Now onwards, the tribunals will handle cases of GST, reducing the judiciary’s load.
- The hotel industry is provided with some relief: GST amendments have proved beneficial for the hotel industries. The transaction value has replaced the declared tariff as the basis for tax payment. It is good because the hotels are often charging lower than the initially declared tariff.
- Tax reduction on e-books for easy access: Supply of e-books is now cheaper, which makes it easier to access. The tax forces to apply to the supply of e-books are now lowered to 5%, which was earlier at 18%. It is a very successful step under GST amendments for students and scholars.
- Filing return on accumulated ITC permitted: To lower the fabric prices by 3-4%, the GST Council has taken a significant step. It has decided to allow filing return on accumulated Input Tax Credit (ITC) on fabrics. Healthy competition in the textile market will prevail as a result of this step.
- Exporters and small businesses to get relief for their complaints: Great relief is now evident for exporters and small businesses. Allowing refund on the return filed last year and introducing e-wallet by GST council is a boon for small businesses. This step will assist in resolving liquidity in the export sector.
- Postponing implementation of the reverse charge mechanism: Until September 30th 2019, GST would not urge on registered persons who receive supply from unregistered suppliers. Meanwhile, the council is working on implementing the reverse charge mechanism.
- Rates rationalised for some essential items: Consumers often purchase some basic goods like sanitary napkins. Rates of these products have now been rationalised, making the consumer very much satisfied. Women are very happy as there is no GST on these items. This exemption from GST is as a result of various campaigns on sanitary napkins all over the nation.
- Increase in GST exemption threshold: The taxpayers from six states Sikkim, Arunachal Pradesh, Himachal Pradesh, Uttarakhand, Assam, and Meghalaya are now lucky. The benefit is in the GST exemption threshold, which now sets to 20 lakhs from 10 lakhs.
- Lithium batteries and ethanol to be charged lesser tax: The electronic manufacturing sector and industries using ethanol benefit greatly from the tax reduction on lithium batteries and ethanol. The tax slab has come down from 18% to 5% for ethanol benefitting the sugarcane farmers, as well as the petrol blending process. The tax reduction on lithium-ion batteries from 28% to 18% will lead to increased production of electronic items. It will make them easily available and more affordable to consumers.
At the early stage of implementation, the GST council faced a lot of public criticism on account of the tax structure. People were not sure if the new tax policy would benefit their businesses and the nation’s economy. To make GST a positive change for all, the government decided to make certain GST amendments to make the process seamless and profitable. The council is also trying its best to achieve well in all sectors being at an initial stage. There are some loopholes obviously in the sectors like real estate.
The GST council is trying to improve all of these. We are hoping that the new GST amendments will favour the growth of companies and boost the Indian economy. 3E Accounting, being an experienced firm will help you register your business, provide assistance for GST registration, support for filing GST returns, obtain GSTIN, along with other GST-related services.