What exactly is GST?

What exactly is GST?

Considered a digital successor of VAT (Value Added Tax), the introduction of the Goods and Services Tax was one of the biggest transformations seen in the Indian taxation system.

Having officially been introduced in July 2017, under GST the tax is levied at the same rate across the country and the revenue is shared by the Central and the State governments, unlike under the erstwhile laws where separate taxes at different rates were levied by the Central and State governments.

Tax laws before GST

The following is a list of some of the indirect taxes in the Indian fiscal system prior to the introduction of GST:

• Central Excise Duty
• Duties of Excise
• Additional Duties of Excise
• Duty of Customs
• Additional Duties of Customs
• Special Additional Duty of Customs
• State VAT
• Central Sales Tax
• Purchase Tax
• Luxury Tax
• Entertainment Tax
• Entry Tax

Indirect taxes are amounts, or a percentage of, that are charged based on how much people consume, unlike a Direct tax which is charged on the level of income. Indirect taxes are also what we call consumption-based taxes, so they are levied based on when a good or service is used or consumed as opposed to origin-based taxes that are levied at the time of production.

History of GST in India

Taking into discussion the timeline of this tax, we can see that the thinking behind this began long before 2017.

GST is one such consumption-based Indirect tax having developed due to a ‘One Nation One Tax’ mentality. It is a multi-stage tax system, which means it is charged at every stage where some form of consumption is observed. It is implemented all over India and was formed mainly to decrease the cascading effects of other indirect taxes.

Objectives of  implementing GST were

• Minimising costs
• Encouraging better productivity and efficiency
• Making taxation simple
• Enhancing compliances amongst businesses
• Improving the country’s revenue
• Widening the taxpayer base in India

It also helps with:

• Regulating unorganised sectors
• Enabling fair treatment of E-commerce operators
• Reducing tax related complications
• Making the filing process much easier due to being a completely online procedure
• Forming a higher tax threshold so lesser earners aren’t exploited

GST has brought in not only ease to the government in regulating and taxing the economy, but has also made the once complex procedure much simpler for taxpayers. Earlier taxpayers could not settle one tax for another and ended up having a lot of taxes to pay off, however due to now only one tax being applicable to the whole nation, the tax burden has reduced for individuals as well.

GST returns are a by-product for all those registered to pay GST. They are documents containing details of the income and expenses of a taxpayer registered under GST. It is used to calculate their net tax liability, or simply the money owed to the government. This record includes information such as Sales and Purchases made by the taxpayer, as well as taxes paid and credits received by them.

Failure to pay the tax can result in a person or business having to pay a huge amount of penalties and interest. Thus, GST bearers must ensure they pay in time every month. 

All in all, the introduction of the GST system has brought in several beneficial changes to the Indian economy. It has assisted businesses in curbing the rising effects of having to deal with multiple indirect taxes, thus reducing their tax burden and urge to avoid paying them. It has vastly simplified the system for everyone, and the online shift has also introduced systems like E-way Bills and E-Invoicing. It has also stimulated demand in the economy due to fall in prices.

Cygnet simplifies this process even more. Cygnet, as a trusted GST Suvidha Provider, offers businesses a seamless and innovative solution to navigate the complexities of GST compliance. By simplifying tax management, reducing the tax burden, embracing technology, and stimulating demand, Cygnet empowers businesses to focus on their core competencies and drive growth. Don’t let GST compliance be a hurdle; partner with Cygnet today and experience the benefits of a streamlined and efficient GST system.

Benefits of GST

Amplify your GST compliance experience and drive your business towards success.

1. Streamlined Tax Management: Cygnet understands the challenges faced by businesses dealing with multiple indirect taxes. Leveraging its expertise as a GSP, Cygnet offers seamless, user-friendly GST compliance software that simplifies tax management. With Cygnet, businesses can eliminate complexity and embrace a unified GST compliance process.
2. Reduced Tax Burden: One of the significant advantages of partnering with Cygnet is the reduction of the tax burden. By eliminating the hassle of dealing with multiple taxes, businesses can focus more on their core operations. Cygnet’s comprehensive compliance services ensure that all GST-related tasks, such as filing returns, maintaining records, and managing invoices, are efficiently handled. This not only saves time and effort but also ensures accurate tax calculations, minimizing the chances of penalties or audits.
3. Embracing Technology: In today’s digital era, technology plays a vital role in enhancing efficiency and productivity. Cygnet recognizes this and empowers businesses with cutting-edge technology solutions. Through its platform, businesses can seamlessly generate and manage E-way Bills and E-Invoices. These features not only comply with GST regulations but also enable businesses to stay ahead in a competitive market. By embracing technology-driven solutions, Cygnet ensures that businesses are well-equipped to adapt to the evolving GST landscape.
4. Stimulated Demand and Growth: The implementation of GST has led to a reduction in prices, stimulating demand in the Indian economy. Cygnet’s expertise as a GSP contributes to this positive impact by simplifying the GST compliance process for businesses. As the tax burden reduces and compliance becomes more manageable, businesses can allocate resources effectively, invest in growth initiatives, and drive overall economic development. By partnering with Cygnet, businesses can unlock new opportunities and contribute to India’s growth story.

Start your GST Compliance journey today.

Krunal Shah

Senior Tax Expert

Krunal is a member of the Institute of Chartered Accounts of India, a Certified Management Accountant, and a management graduate. With a background in finance & taxation and years of experience advising clients on intricate tax matters in India and the Middle East, he brings a wealth of financial acumen and regulatory insight to the world of taxation. At Cygnet.one , he heads the managed services, ensuring timely tax compliance for some of India’s finest corporates. Through his published works, he simplifies complex tax concepts, making them accessible to a broad audience and empowering readers to navigate the intricacies of taxation with confidence.