Implications of GST and the transition from an existing tax regime to a GST regime

July 26, 2017

Recently the Central Government unveiled the Goods & Services Tax, which is aimed to bring about a rapid reform in the Indirect Tax structure in this country. GST is a comprehensive, multi-stage and destination based tax that is aimed to drive economic growth and improve the quality of life of general citizens. It provides a unified and a simplified method of indirect taxation without any hidden taxes. In fact, GST is a replacement of already existing several indirect taxes including VAT, CST and Service tax. One of the major objectives of goods and service tax is to create a single and a unified market for the entire country, which might have a positive impact on the overall GDP of India, thereby giving a big boost to the Indian economy.

Though Goods and Service Tax is a single tax levied across various goods and services in the country, however, you also need to understand the dual system of GST that consists of:

Though Goods and Service Tax has its own implications on the common man and industry, let’s try to briefly examine some of the pros and cons of GST on both the goods and the services sector:

Pros:

A unified tax system without the burden of multiple tax system, that was prevalent earlier
Offers lot of transparency, which in turn might reduce corruption
Positive impact on prices – reduction in prices, which in turn improves consumption and benefits companies
Some products in the FMCG sector may tend to become cheaper.
Since GST is not a cost to registered retailers, there is no chance of hidden taxes.
As GST is an integrated system, there is no separate taxes for goods and services (which was earlier) leading to a less complicated and simplified tax system

Cons:

Services are bound to become expensive, for instance, banking and telecom.
Certain products in the retail segment such as garments, which was earlier taxed at 4% are bound to increase on account of GST, making them dearer.
As the tax structure is still new, there is no proper awareness among the manufacturers and traders, which might lead to uneven prices, effecting the final consumers.
In case the retailer doesn’t pass the actual benefits to the consumers, the price of the goods might remain the same or even priced higher.

From a legal perspective, it is the duty of every trader or manufacturer to abide by the new tax regime and promptly file the returns on the stipulated due dates. While ensuring strict compliances in filing the GST returns, the transition from an existing taxation system to GST becomes troublesome, when there is no adequate software support – a proper utility software tool that can sync with GSTIN. A good software solution should support the complete GST landscape, customized as per the specific business requirements, easy to use as well as affordable, among other things to help in smooth adoption and transition to the GST eco-system.

It is in this context, Sailotech, a Hyderabad based company has developed a new state-of-the-art GST filing and reconciliation solution – XaTTaX that redefines the way GST transactions are processed and managed. XaTTaX simplifies the filing of returns, claiming refunds, raising invoices and much more, anywhere, anytime. Apart from that, it offers a multi-layered security mechanism, which implies that whatever transactions you process are 100% secure and confidential. To know more about our product, visit us at XaTTaX.in or click here to schedule for a free demo to know how it can be an indispensable GST software for your business.