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Overall Impact Of GST

Updated on: 08 Aug, 2023 11:40 AM

GST is brought to the footings on the notion of One nation One tax. The Tax reform is expected to bring the 2% increase in GDP and hence is expected to change the entire structure of indirect taxation.The most affected Individual shall be the manufacturer as the due to overall reduction in the ceiling limit of 1.5cr. to 10 lakhs thereby resulting into more taxpayers(Taxable Person) within the ambit of GST. Now even the small Shopkeepers who is having turnover of 10 lakhs or more in a year will have to pay the GST. Although GST will help create a single unified market across India and allow free movement and supply of goods in every part of the country. It will also eliminate the cascading effect of taxes on customers which will bring efficiency in product costs.

Credit Situation Manufacturer Trader Service Provider
Present scenario Cannot Claim Credit of CST and hence becomes part of Cost in case of inter-state sale.

Cannot claim Credit of excise duty.

Cannot claim credit of excise duty as well as VAT.
GST No Origin based taxation like CST. Due to which Inter-State sale will be cheaper Will be able to claim the credit of GST Will be able to claim the credit.

There Will be three types of GST i.e. CGST, IGST, SGST. The aforesaid GST will be levied in Following Manner:-

Purchase Sale Type Of GST on Purchase Type Of GST on sale
Inter Inter IGST IGST
Intra Inter CGST & SGST IGST
Inter Intra IGST CGST & SGST

Manner of Claiming the credit shall be as per following Table:-

Input Credit (asset) Out liability against Input can be claimed

There were various confusions with respect to treatment of particular item as good or services is also taken care under the GST taxation regime. For example in case of sale of software both VAT and service was imposed due to lack of clarity with regard to the treatment of software as goods or service which resulted in cascading effect,now as per GST it is to be treated services. furthermore the most complicated provisions w.r.t works contact shall also be simplified in which (under existing regime) some portion was to be levied with VAT and on balance service tax was levied. Now it is to be treated as Service. From the Above discussion it can be observed that GST is be kept more of Service tax oriented as most of the provisions are tilted towards the service tax. The threshold limit as per modal law is also kept upto 10laks (5 lakhs for north-eastern religions) is the another observation.All the compliance as well as administration process to the maximum kept electronic. There is also a provisions for E-cash Ledger and E-Credit Ledger for the purpose of credit utilization. The existing registered assesses need not to obtain the separate registration as they will be automatically fall into GST. In the end will like to conclude that the one having better grip over service tax provisions will be in a step ahead situation and it should be taken as opportunity for growth rather than as an hindrance in present system.

CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.