When it comes to business, one of the things that is a given is taxation.
Taxes are levied on several things in the economy, with businesses being one of the most taxed entities.
In general, a business can expect to be taxed from the beginning to the end.
From the time the raw materials are purchased, or people are hired, to the point where the goods and services are sold, there are a whole range of taxes.
Levied at both the central and state level, businesses contribute a great deal to the country’s treasury, through the system of taxation.
When it comes to the actual system of taxation, it wasn’t too long ago that businesses were subjected to a very different taxation system.
On average, a business could be subjected to about a dozen plus different taxes, for a variety of reasons. It was only a few years ago that all of these taxes were replaced with a single tax, called ‘Goods & Services Tax’, or GST.
The GST taxation system was introduced because of several advantages and benefits, and holds true whether for a gst registration in delhi or anywhere else.
The details of the same are given in the list below.
- The Simplification of the Tax Process
This is by far one of the most important benefits of the gst number, in delhi as well as other places.
The presence of multiple taxes in the economy proved to be a real challenge for businesses as well as government employees. In an effort to simplify the taxation process, it was decided to eliminate the majority of these taxes, and instead replace them with a single uniform tax throughout the country, with the gst no in delhi and other states of India.
As a result of this, it was possible for businesses to complete the necessary tax formalities faster than ever before. Likewise, the government was also able to streamline and carry out its many functions without the inefficiencies of the past. This is very much true and would apply for gst, in delhi and all other parts of India.
The above is something that holds true, whether one was to register gst in delhi or elsewhere.
- Increased Tax Collections
Another advantage of the gst number, in delhi and elsewhere, was that of increased tax collection.
Due to the way in which GST operated, applicable for gst registration in delhi and otherwise, there was an increase in the overall amount of taxes collected, both at the time of introduction as well in the following years.
- Elimination of the ‘Cascading’ Effect of Various Indirect Taxes
The reason for this had to do with how taxation worked before, was on the principle of ‘tax on tax’.
To understand this, one will have to look at a simple example.
- Before GST – Let’s say a company sold a product at Rs 100. There was a service tax on it at 10% or Rs 10. The final cost to the consumer would have been Rs 110. At the same time however, the company would have invested in Rs 50 for maintenance, which would have had a VAT tax rate of 10%, or Rs. 5. The additional costs in the form of outflow would have been Rs. 15 rather than 10, since the Rs 5 could not be deducted.
- After GST – In the case of GST, the system would allow for this deduction, meaning that the outflow would have been Rs 5 instead of Rs 15.
If you want a better understanding about this ‘tax on tax’ concept, do check with a gst consultant in delhi or whatever state you are in, for more details.
- Cheaper Products & Services for Consumers
This hasn’t always been so, but it is something that does apply in many cases.
Many customers have found that the prices of goods and services have come down in recent times, due to the way GST operates.
In fact, one of the reasons why the GST proposal was welcome by many consumer groups was that the progressive tax system helped the consumer to access goods and services at a cheaper rate than before.
While this is not something that has been entirely true, the effect in this direction has been seen in some sections of the marketplace.
One of the main reasons for this was due to the benefit mentioned in the previous point, as well as different taxation rates that were introduced under GST.
- Ease of Doing Business
Of the many indicators of economic freedom and growth, one of the most important would be that of the ‘Ease of Doing Business’ index.
Created by the World Bank, it is a system that evaluates the business environment in a country, and allows for the same to be categorized according to its ‘business friendliness’. In other words, it studies just how easy it is to start a business in a given economy, based on various indicators.
This is a very important indicator, as it helps understand the current state of an economy, and its potential to achieve economic development and growth. It allows for economists and policy makers to understand areas that need change, so as to make the country more conducive to business.
Of the many such indicators, one of the most important is the amount of bureaucracy and paperwork involved in starting a business. In India, the introduction of the gst no in delhi and other places helped to clear away a great deal of this hurdle, enabling business to be more willing to engage with the economy of a country.
It should be noted that there are indeed many more advantages and benefits as well, if one were to apply for gst, in delhi or elsewhere. More information about this can be known when you register gst in delhi, or whichever state you are in.
The above are just some of the main advantages of GST, rather than being a list conclusive in nature. For more information, do check with a gst consultant in delhi or whichever state you are residing in to know more.
As a whole, it can be said that India has benefited tremendously from the implementation of the GST regime in India.
Thanks to this new tax regime, the average business owner has been freed from the taxation bureaucracy, allowing for greater focus on the economic growth and development of the business itself as well as the larger economy.
While there are indeed a lot more things that can be changed, this system is perhaps one of the best things to have ever happened in the history of India’s economy.