The Impact of GST on Business and Its Filing Requirements

Posted In | Finance | Accounting Software | India Accounting Tax

Goods and Services Tax, commonly known as GST, is a comprehensive, multi-stage, destination-based tax that has been implemented in India since July 1, 2017. It has replaced several central and state levies including excise duty, service tax, VAT, and others. The implementation of GST has had a significant impact on business operations and procedures with respect to tax computations, compliance, and filing requirements.
 

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The Impact of GST on Business Operations

One of the major impacts of GST on businesses is the simplified tax structure. Before the introduction of GST, businesses had to comply with different tax laws of different states. This led to a lot of confusion and difficulties in tax compliance. However, with the implementation of GST, businesses now have to comply with a single tax law. The introduction of GST has also led to the elimination of cascading tax effects, where tax is levied on an already taxed amount, thereby reducing the overall tax burden on businesses. This has resulted in cost savings for businesses which can be passed on to consumers in the form of lower prices.

Another significant impact of GST on businesses is the increase in the threshold limit for registration. Before GST, businesses with a turnover of more than Rs. 5 lakh (in most states) were required to register for VAT. However, under GST, this limit has been increased to Rs. 20 lakh, thereby reducing the tax burden on small businesses.
 

GST Filing Requirements

With the introduction of GST, the tax filing process has also been greatly simplified. Businesses need to file monthly, quarterly, and annual GST returns based on their turnover and the type of registration. The monthly returns are GSTR-1 (details of outward supplies), GSTR-2 (details of inward supplies) and GSTR-3 (monthly return). The quarterly returns are GSTR-4 (for composition dealers) and GSTR-5 (for non-resident foreign taxable persons). The annual return is GSTR-9.

Additionally, there are also other returns such as GSTR-6 (for input service distributors), GSTR-7 (for authorities deducting tax at source), GSTR-8 (for e-commerce operators), and GSTR-10 (final return before cancelling GST registration). The GST return filing process is completely online, which makes it easy and convenient for businesses. However, it is important for businesses to ensure that they file their returns on time to avoid penalties and interest.
 

GST has had a profound impact on businesses in India. While it has simplified the tax structure and compliance requirements, it has also increased the need for businesses to understand and implement the new tax laws and filing procedures. This has made professional tax consultation and GST software tools increasingly important for businesses.