GST (Goods and Services Tax) was a long-awaited tax reform that replaced multiple taxes across states and union territories. GST resulted from calls for One Nation, One Tax regime and was introduced in 2017. Your business will be allocated a GSTIN (Goods and Sales Tax Identification Number) that needs to be prominently displayed at the entrance. A certificate of registration is also provided by the Government of India that proves your GSTIN.
Let’s look at the benefits and improvements that GST brought with it;
Elimination of cascading tax effect
Cascading tax is a tax on tax, compounding the actual tax paid at the end of production. This is evident in products with multi-stage production systems, collecting tax as it moves through the supply chain to the consumer.
In the pre-GST era, in most of the states of India, the threshold for taxation was a turnover of 5 lakhs or more. This was not uniformly followed across India. Each state had its own threshold. With a lot of disparity among states, complexity increased for businesses that operated interstate.
In the post GST era, with the increase in threshold, the government has exempted small traders and service providers from paying GST.
Composition scheme for small businesses
GST allows small businesses with a turnover of 1.5 crores to lower their taxes using the composition scheme.
Simple and Easy process available online.
The GST registration process has been made completely online for the benefit of taxpayers. This has turned out to be a boon for start-ups who had to run around for various types of registrations earlier.
Lesser number of compliances
With GST, the taxpayer has to return only one unified return against multiple returns like excise, service tax and VAT required in the pre-GST era.
In the pre-GST era, businesses had to maintain multiple warehouses across states to avoid CST and entry taxes to the state. GST has lessened this burden on logistics, with warehouse operators and e-com aggregators setting up warehouses at strategic locations. This has helped cut losses incurred due to over-investment in logistics and inventory, further driving profits for these interstate businesses.
Regulation of the unorganized sector
Some unorganized and unregulated industries like textile and construction now see some accountability and regulation in the GST era.
If you run a GST registered business, you are required by the GST Act to provide your customers with a GST compliant bill/invoice. A GST invoice must include the following:
- Date of invoice and the invoice number
- Name of the customer
- Address of the customer (both shipping and billing)
- In cases where the value of the invoice is more than Rs.50000, the invoice should also include customers GSTIN. If the customer is not a registered taxpayer, the bill should include the name and address of the customer, delivery address, and state and state code name.
- Place of supply
- HSN/SAC code
- Item details that include item code, description, quantity, unit and total value
- Any discounts if applicable.
- Segregated rate and amount of taxes for CGST, SGST and IGST
- Reverse charge eligibility
- Signature of the supplier
You can also find different styles of GST bill format online