With the move towards a new era of taxation, India has subsumed 17 Central and State taxes and 23 cessesinto one single tax.
India moved to a new tax regime from the July 1st, 2017 with the rollout of GST. This transition has brought about a change in various businesses and has had an impact on many individuals. It has brought about a complete change in online shopping. Under the GST, the delivery of goods will be faster than earlier, due to the elimination of the paperwork that was required to be filed with the State authorities. There is bad news as well, with a quick delivery, it will now become difficult to return the goods since the companies will have to bear the tax amount on their own and will be able to get a refund from the government later on. This means, e commerce companies will face a cash flow disadvantage in case of returns and order cancellations.
Another advantage for customers is the reduction in the nominal tax rates for most of the goods. A lot of items will be exempt from GST and many others will be taxed at a lower rate of 5%. The balance goods will come under 12% or 18%. Further, the Government has established an anti profiteering body which will keep a watch on how the businesses adjust the tax inclusive prices charged from its consumers. The companies are expected to pass on this benefit to the consumers which will lead to a further fall in the prices of the goods.
All the filings under GST will now be done online. Hence, the traders will not only need to adapt to a new system, but also train the employees to become tech savvy. This will affect the small traders, who did not use computers earlier. It is assumed that GST will bring transparency in the entire process of business and put an end to tax evasion. All the invoices uploaded by the sellers will be visible to the buyers as well. It will bring down the tax burden in the long run.
The Government has put an end to the excise duty exemption for the units which set up their production unit in the North East, hence, businesses will have to make sound financial decisions based on their knowledge. Units already established in the excise free zone will be required to pay taxes and then claim refunds for the balance period. With a shift in the burden of taxes from the manufacturers, they will now pay lower taxes and a competitive business environment will develop. Manufacturers will be required to file 37 returns per State, but it is expected that the entire process will be easier and non complicated. Since businesses have to deal with only one tax authority, the process of uploading invoices and filing the returns will be much simpler and quicker. The GST is expected to have a positive impact on businesses across different sectors.