After the implementation of GST in India on July 1st, 2017, there was a huge hue and cry across the nation to understand the concepts of GST. Businesses and service providers were constantly checking the impact of the implementation of GST in their sectors.
The concept of GST is quite simple however, it is difficult to comprehend in a layman’s language.
Now let us try and understand how does GST actually work!
It is important for the businesses to register under GST if they are dealing in taxable goods and services. If the annual turnover of the businesses exceeds RM 500,000 they are expected to register and obtain GSTIN number for their business.
Businesses should also ensure that their suppliers and contractors are also correspondingly registered under GST in order for them to avail the input tax credit benefits. The aim of GST is to bring the unorganized sector into the organized sector. Hence any dealings with unregistered dealers will not be eligible for credit under GST.
Businesses are also required to ensure proper books of accounts are maintained to keep records of output tax and input tax. They are required to issue appropriate tax invoices as prescribed in the GST Act and filing returns appropriately.
These books of accounts are required to preserve for at least 7 years.
GST will be charged on most goods and services following under the following tax brackets:
GST will also be taxed on imports of goods and services. However, there will be no duty charged on exports of goods. GST aims to curb all the other indirect taxes and subsume everything under one bucket. The revenue collected by the government would remain the same as the old tax regime, however, under GST there will equalities of income and proper distribution of wealth between states and classes of people.
GST will be levied and collected by both Central and state government. The state governments will have their own set of rules and policies in order to determine the different treatment of goods and services in that particular state. GST follows three major type of taxes CGST (Central GST), SGST (State GST) and IGST (Integrated GST). Another type of GST is also called the UGST which means Union territory GST.
In the short run, GST is expected to have a lot of teething issues with respect to the consent of all the states, implementation of proper systems, transferring to the uniform GST principles. However, in the long run, GST will prove to be a blessing for the Indian economy as it will help the economy to flourish and bring in higher growth and create better job opportunities in the market. The aim is to tax basis one nation one tax.