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What Are the Benefits of Introducing GST in India?

GST has enabled small businesses to simplify their tax return by introducing the Composition Scheme under GST

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GST
The GST created a unified tax structure and provided businesses with certainty and transparency. 

The Goods and Services Tax is a consumption tax that has changed the way India does indirect taxation. The GST was under consideration for a very long time. The tax structure which India had before the advent of the GST was quite complicated and extremely convoluted.

There were many taxes which were administered by a myriad of governing bodies, some going down to the city level. This created a lot of problems for businesses and consumers alike. Not only did businesses have to employ people to figure out and compute the tax, but they also had to figure out who to pay it to.

GST
Simplification of small business was a priority which is why, for example, the Composition Scheme under GST was introduced. This scheme helps small businesses reduce red tape and file more straightforward tax returns.

This created a drag on the economy and took money out of productive uses. All of this changed with the introduction of the GST tax. The GST created a unified tax structure and provided businesses with certainty and transparency.

Simplification of small business was a priority which is why, for example, the Composition Scheme under GST was introduced. This scheme helps small businesses reduce red tape and file more straightforward tax returns.

Some of the main benefits of the Goods and Services Tax system are:

1. Simplification of the Tax Code:

The pre-GST era was characterized by a complex and murky tax structure in which companies had to navigate as best they could. There were many layers of taxes such as VAT, Cess, Central Excise Duty as well as local taxes at the city level, which needed to be paid when a product or service was delivered to the customer.

This has now been simplified with the introduction of the GST. Now companies need to keep track of one single tax. They can now file taxes with a single entity in a secure manner.

2. Ease of Doing Business:

The implementation of GST has brought India up the ease of doing business rankings. Having a convoluted and complex tax structure with the manual filing of taxes creates a massive volume of paperwork.

Not only was there a lot of paperwork, but offline tax filing also created scope for corruption. GST has changed all of that with the introduction of one single tax under a single tax authority. It is now a much more streamlined process which is easier for businesses to navigate.

It is also essential to have a streamlined tax process for attracting foreign investors, so that has helped with Foreign Direct Investment in India.

3. Double Taxation:

Pre-GST, there was a problem of cascading taxation, wherein taxes would be piled on top of each other, leading to double taxation. A lot of the time, businesses and consumers had to pay a tax on top of another tax.

This was because there was no way for businesses to claim an input tax credit for every step of the way. GST has changed that entirely by introducing a system where each every step of production of a product is recorded, so taxes are only added incrementally, and double taxation is avoided.

Also, small businesses faced a daunting task of navigating the complex tax system, and the GST has enabled small businesses to simplify their tax return by introducing the Composition Scheme under GST. This has been a significant benefit of GST.

4. Tax Compliance:

Tax compliance has always been an issue in India, under the older tax system where tax filing was mostly done manually, there was a lot of tax evasion and under-invoicing.

Since there was very little that the government could do to track the production of goods. With the advent of the GST, the way the system is designed, it is much easier to track the production of products through the various invoices uploaded by businesses.

The Input Tax Credit system also incentivizes companies to report the number of goods and services used so that they can claim Input Tax Credit. This has been a positive development for tax collection.

5. Increased Tax Collections:

With increasing tax compliance, there is a potential for increasing tax collections. With the increased tax collection, the government can spend more money on important public services like health, safety, etc.

This is also one of the most important benefits of having a tax system that allows higher rates of compliance.

GST
The Goods and Services Tax is a consumption tax that has changed the way India does indirect taxation. The GST was under consideration for a very long time. Pixabay

6. Foreign Investment:

In a globalized world, it is vital to attract capital from around the world. Top companies who want to invest in a country look for stable and transparent tax regimes so that they have regulatory certainty.

The older tax structure was haphazard and under the authority of multiple tax collecting bodies. This created a problem for foreign firms who wanted to invest in the country but had a tough time negotiating the tax landscape of the country.

The GST has completely changed that. The GST is under one central authority and uses the GSTN (Goods and Services Tax Network), which is the information technology service which underpins the whole system.

The GST system is also much more nimble and able to respond to the needs of the market because it is under one single tax authority, the GST Council. This is also an excellent benefit for the country as it doesn’t take a lot of consultation to change the rules in case of adverse market conditions.

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In conclusion, there are several benefits to the country as a whole with the implementation of the GST system. Small business is the driving force of the Indian economy, providing a lot of employment. Things like the Composition Scheme under GST has helped simplify the tax filing for small business while maintaining compliance.

Next Story

Use These Tools to Calculate Your Crypto Tax

Be sure to do your research and choose the crypto tax calculator that you think would best suit you

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Tax
People have come to realize that they can learn the fundamentals of this payment system and using a crypto Tax calculator to file and report their taxes. Pixabay

The current state of taxation on cryptocurrencies-

One of the biggest hurdles while trading in cryptocurrencies is the calculation of taxes also known as Crypto Tax of the investments and returns. Most people despise the idea of filing their regular taxes. The idea of filing taxes for cryptocurrencies is generally met with more frustration and annoyance.

Moreover, cryptocurrency tax rules vary with each country. Several countries have a severe lack of ground rules and regulations surrounding cryptocurrency taxation. Dealing with cryptocurrencies is undoubtedly much more difficult in such countries in comparison to those countries with set regulations. The general population’s confusion around cryptocurrencies is entirely understandable.

Despite this, people across the world are getting themselves involved with cryptocurrencies at varying degrees. People have come to realize that they can learn the fundamentals of this payment system and using a crypto tax calculator to file and report their taxes.

Tax
One of the biggest hurdles while trading in cryptocurrencies is the calculation of taxes also known as Crypto Tax of the investments and returns.

The need for a crypto tax calculator

A crypto tax calculator is an invaluable tool that automates and speeds up the process of calculating taxes and yields accurate results. Whether you are an enthusiastic amateur trader with a few bitcoins under your belt or you are a seasoned cryptocurrency day trader, the tools mentioned in this article are bound to help you.

Tax
A crypto Tax calculator is an invaluable tool that automates and speeds up the process of calculating taxes and yields accurate results.

Since the inception of cryptocurrencies in 2009 spearheaded by Bitcoin, a significant number of quality crypto tax calculators have been come up to make the crypto taxpayer’s job easier. While there are countless crypto tax calculators, we will mention a few of them that you can choose from to take care of your crypto taxes.

Concern over risks that come with cryptocurrencies-

Given the volatility and complexity of cryptocurrencies, people have become apprehensive, albeit curious about the value and role of cryptocurrencies in the digital age. While most people understand the fact that cryptocurrencies are secure, they realize that they are also prone to loss and theft. No central authority or external influence can control cryptocurrency transactions. It is possible to trace transactions but impossible to track the accounts back to their respective real-world identities.

The top crypto tax calculators-

Koinly.io

Koinly is one of the most popular crypto tax calculators in recent times. It has its Headquarters in London. Owing to the sleek and intuitive UI, it is perfect for regular traders and amateur crypto enthusiasts alike.

Another point in Koinly’s favor is that a new user can start using it for free and pay when the final reports are to be generated. In addition to this, it officially supports the tax systems of over 100 countries, 33 exchanges, and six blockchains. It also has several notable features that include a portfolio tracker.

Koinly seems to have the edge over most crypto tax calculators as they develop their tax reports in partnership with audit consultants from KPMG. Hence, they are legally compliant. Their reports also support all the primary accounting methods, including the ACB (Average Cost Basis) and FIFO (First in First out) method.

CoinTracking

CoinTracking analyzes your transactions and generates real-time reports on various things like profit and loss, the value of your Bitcoins, realized and unrealized gains, and reports for taxes.

Cointracking seems to be an all-in-one solution for your cryptocurrency taxation and portfolio tracking requirements.

 It is also compatible with some third-party crypto tax calculators and software like TurboTax. Of course, this depends on the country out of which you are based.

Bitcoin.Tax

Bitcoin.Tax is known as one of the oldest crypto tax calculators. As a result, it is a highly trusted crypto tax calculator among long-time crypto investors and crypto enthusiasts.

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Bitcoin.Tax seems to suit old-school accountants owing to their not so clean interface and the presence of a large amount of text.

The downside to this crypto tax calculator is that it looks dated compared to its competitors like Koinly and Cointracking. Just like Cointracking, Bitcoin.Tax has also partnered with TurboTax to support the seamless importing of cryptocurrency tax data into mainstream income tax reports.Bitcoin.Tax seems to suit old-school accountants owing to their not so clean interface and the presence of a large amount of text.

It is likely to be the one for you if you are looking for a traditional crypto tax software.

BearTax

BearTax is similar to Coinbase due to its simple UI and design language.

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Like all other crypto Tax calculators mentioned, BearTax supports the important exchanges and cryptocurrencies. Like all other crypto tax calculators mentioned, BearTax supports the important exchanges and cryptocurrencies.

Their key selling points seem to be the diversity of features, options in pricing, and functionality.

Like all other crypto tax calculators mentioned, BearTax supports the important exchanges and cryptocurrencies. However, It should be said that BearTax could do very well with a few more intuitive features like a performance tracker.

Zenledger

Zenledger is another quality crypto tax calculator. Users can import cryptocurrency transactions and calculate their capital gains and crypto-related income.

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Zenledger is another quality crypto Tax calculator.

The transaction history is imported, following which the tool generates all the crypto tax-related entities such as capital gains, income, donations, closing reports, and profit and loss statements.

Conclusion-

As Blockchain technology continues to spread, we will witness the increase in the number of crypto tax calculators. However, a crypto trader must understand the fundamentals of cryptocurrencies to make the best use of crypto tax calculators. In order to take care of your crypto taxes seamlessly, you ought to spend some time searching for the crypto tax calculator that is right for you.

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Be sure to do your research and choose the crypto tax calculator that you think would best suit you. To do that, it is crucial that you fully understand what you want from a crypto tax calculator.