By Lal Singh Back in 2017, the Indian government came up with the GST Act to simplify the taxation of the sale and purchase of goods and services. And sure enough, if you’re an individual or a business selling or supplying services or actual physical goods, you need to file GST and have something called the GSTIN. From the looks of it, of course, on the business owner’s end, it is a beneficial thing, but still, if you feel confused about this GST filing thing, we’d like you to keep on reading these possible GST Filing Advantages and Disadvantages. Let’s get going now.
GST Filing Advantages
1. No More Tax on Tax
Prior to the introduction of GST, businesses had to contend with a highly complicated tax structure that involved taxation at each and every step of production. Manufacturers paid taxes on the production of goods right from the start, and then retailers would pay taxes once again on the very same items, even though the manufacturers had already taxed these items. GST proved revolutionary to businesses as it took away this multi-layered great wall of confusion’s cascading taxation effect, which was a BIG headache for most businesses out there.
2. Fully Online Process
The biggest advantage of GST filing is that it is entirely online and simple. In this modern era of technology, business owners are not required to cope with filing papers in cumbersome heaps, nor must they visit government offices. With a single click of a mouse, owners can do anything from checking their GST registration to filing their GST return via the user-friendly GST Portal on their computer. Plain and simple!
3. Input Tax Credit (ITC)
One of the significant features of this very tax system is that it allows businesses to reclaim the Input Tax Credit, which serves to lower the amount of output tax a company/business pays on sales. This is essentially a way for businesses to offset some of the taxes that they have already paid on their purchases against the taxes that they will have to collect from their customers. For instance, if a company purchases raw materials to manufacture its goods and pays a certain amount of GST on the materials purchased, the same amount can be deducted or set off from the total GST payable on the goods sold to the customers.
4. Better Threshold for Small Businesses
In this present time, many businesses must be aware of the number of taxes that they have to pay and the ways they are supposed to pay them. Earlier in times before the introduction of the Goods and Services Tax (GST), businesses that generated an annual turnover of over 5 lakh rupees in India were forced to pay numerous taxes that would vary from state to state. However, under the current provisions of GST, the newer businesses have been able to attain this threshold limit from the previous set limit of 5 lakh rupees to 20 lakh rupees.
5. Improved Business Credibility
When you file your GST returns on a timely basis, it clearly illustrates that your business practices are responsible and legitimate, which gives your firm an air of credibility that can do wonders in increasing and enhancing your relationship with financial institutions such as banks and credit unions.
6. Easy Movement of Goods Across States
It’s true that GST has significantly improved the transfer of products from one state to another, as it has inter-state transactions free of many other taxes charged at the state level. By effectively opting an ‘e-way bill system’, the transportation of goods has been improved quite faster than before, and one reason for that is minimizing or removing the delays at the state borders.
7. Better Business Insights
Businesses that are registered under the Goods and Services Tax (GST) regime are expected to follow practices that are in compliance with the requirements of the law. These practices include submitting reports containing the summary of sales, purchase details, and tax amounts that were settled due to the business’s level of sales and are evaluated monthly. That’s super useful stuff right there.
GST Filing Disadvantages
1. Multiple Returns to File
GST is indeed not merely a single return; instead, based on the characteristics of the business in question, the filing of several returns may be necessary every month. This thus becomes a formidable task, for instance, a small business that has a small number of employees and limited revenue. This is just added work!
2. Need for Technology Upgrades
With the implementation of the Goods and Services Tax in India, the requirement for accounting data and the systems upgrades became highly necessary. Most accounting software packages were available in the market, and the introduction of Goods and Services Tax was totally new and was thus seen as a challenge by many business enterprises. This was a huge expense!
3. GST Portal Issues
It’s important to note that the GST portal is a digital gateway that can experience slow response times or even complete unavailability, particularly during tax filing due dates. You can’t do much about it!
4. Complex Tax Rates
Goods and Services Tax (GST) is now a reform that has been introduced by the Government of India with different tax rates of 5%, 12%, 18%, and 28% charged in different cases for supplying various types of goods and services. Understanding those? Well, good luck with that!
5. Higher Tax Burden for Some Small Businesses
Similarly, the tax structure of the Indian government was relevant for small businesses that were trading below the revenue earnings of Rs. 20 lakh till the taxation system was modified. These small businesses were able to function without registering for GST since they were earning less than the aforementioned threshold.
6. Constant Changes in Rules
The GST laws and the filing protocols are often amended on a frequent basis. These constant changes can become overwhelming for small businesses that do not employ tax specialists or for the ones which have no in-house tax experts dedicated to handling tax matters exclusively.
Conclusion
Now you get why GST filing is important? Well, it sure is from a business standpoint, but still, there are some notable challenges that come along, and sure enough, you’d have to deal with those. That’s how it is, at least for now.