High hopes are laid on the upcoming budget for 2024. To be put together by the recently elected coalition government, GST optimisations are highly anticipated, especially for expanding their exemptions and meeting industry-specific rationales more cohesively. While this kind of tax regime does offer reasonable opportunities for efficient logistics, transparent transactions and the scope of input tax credits, those who want to start a business are frequently perplexed about what they are.
As a reputable GST consultant in India, we at MPVD & Associates work with taxpayers at different stages of their tax-filing journeys. We found that there is still much confusion regarding GST, particularly among young business aspirants who don’t know much about direct and indirect taxes. This article aims to provide much-needed clarification.
GST Consultants in India— Why Do You Need Them?
In 2017, the Goods and Services Tax (GST) effectively replaced most indirect taxes in India, including VAT, service tax, excise duty, purchase tax, and so on. This is a cohesive approach to formalising the Indian economy, bringing every business as well as individual sellers into the tax net. The new tax regime created an avid need for GST consultants in India for older businesses to become compliant.
GST is paid by every individual who engages in the sale of goods and services in India. GST audits are mandatory for all kinds of businesses whose turnover has exceeded Rs. 2 crore. A big part of our GST consulting services in India is offering audit support.
Getting a GST registration is utterly simple. You don’t even need to visit an office; you can do it online from the GST portal. You will need a PAN, Adhaar Card, ID and address proof and a current bank account. It is vital that you make a conscious decision, and agree to adhere to all tax laws and regulations. You can find our GST consultant online from anywhere in India to get started.
-
Types of GST: There are different types of businesses, and individuals and these variations are addressed under the GST laws with specific registration types.
-
Normal GST: All permanent business
-
Casual Taxable Person: Exhibition booth, stall, or temporary shop
-
GST Composition Scheme: Taxpayers with a turnover exceeding Rs. 1.5 crores. Vegetable vendors, restaurant owners, and commercial property renters are some of the eligible entities.
-
Non-Resident Foreign Taxpayer: non-resident Indians or foreign nationals who supply goods or services to India but live abroad.
-
-
Classification and Rates: Determining the correct classification of goods and services is a big part of compliance. A GST return consultant can inform you about the appropriate GST rate more accurately.
-
Input Tax Credit (ITC): Businesses can claim ITC on GST paid on inputs (raw materials, services, etc.) used in the production or supply of goods and services. This helps reduce the overall tax liability.
Looking Back at Direct and Indirect Tax and What Has Changed with GST
The prolific need for a GST return consultant in India is rooted in the fact its implementation has often proven haphazard for certain individuals. The two types of sale taxes that businesses need to pay are direct and indirect taxes, only the latter is conglomerated under GST, you pay direct taxes separately.
-
Direct Taxes: Individuals and businesses pay direct taxes to the government based on their income and wealth. This includes income tax as well as other wealth taxes (levied on inherited wealth), property taxes (levied on real estate), and capital gains taxes. Direct taxes for organizations include corporate taxes. This tax is non-transferable and the person earning the income has to pay the tax.
-
Indirect Taxes: sellers must pay a sum on products and services through a middleman who is responsible for remitting the money to the government. These taxes are imposed on manufacturers, suppliers, importers and exporters, restaurants, gyms, and all such service providers, as well as any other organizations or people that make purchases of goods or services. The tax may be transferred to another payor. For instance, a wholesaler may transfer it to shops, which in turn transfer it to customers. Indirect taxes such as VAT, service fees, central excise duties, and more than a dozen others used to be prevalent.
Since 2017, all of the various taxes have been consolidated under the GST to create a single, comprehensive, one-time tax. Below is a graphical layout of the key differences in direct and indirect taxes. Below is a graphic layout of the system.
|
Context |
Direct tax |
Indirect Tax |
|
Taxpayer |
Individuals and Businesses
|
Goods and Services Providers, Dealers and Customers
|
|
Imposed on |
Individual’s profit or income |
Price of products and services |
|
What Are the Types of Taxes |
|
|
|
Basis |
Direct taxation plays a role in boosting the economy and curbing inflation. |
The imposition of more indirect taxes could enhance inflation. |
|
Tax Rate |
Based on income and profits |
The static rate applied to product/service cost |
|
Tax Principle |
Progressive |
Regressive |
|
Advantages |
|
|
|
Disadvantages |
|
|
Making GST Compliance Simpler for Businesses in India
As a respected CA and GST return consultant in India, our work is to act as the translator of any complexities that come in the way of this phase. So what does GST mean for your business? And how complex can it get that you need to appoint a GST consultant in India? Why not have a quick chat with MPVD & Associates to get a clear understanding? Feel free to contact us, whether you are already a taxpayer, or just need some professional guidance to get started from scratch. We welcome everyone.