The impact of the GST on business-to-business transactions

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GST or the Goods and Services Act are officially known as the constitution Bill 2014. It will be implemented in India from the month of April 2016. It has been proposed to be levied on the taxes put by Central and State Government. It will be inculcated in the indirect taxes category which will be imposed on manufacture, consumptions and sale of goods and services in the country India. The calculation of GST will be based on the input tax credit method. It is being witnessed as a reform in the field of indirect taxation in India. The GST will be implemented simultaneously by the Central and the State Government.

There are a number of benefits associated with the GST which are as follows:

  • It would aid in lessening the double taxation.
  • It would also help in expediting a national market which will be common to all.
  • It would be a simple procedure.
  • The administration and enforcement of the tax will thus be hassle free.
  • The current tax burden is 25-20% for the consumers. With the GST being applied it would result in reduction of the tax burden.

The following are the salient features of GST:

  • It will inculcate the Central Indirect taxes like the excise duty, service tax and also the countervailing duty. The other includes octroi tax, entry tax and also the value added tax like the luxury tax.
  • The consumer will be applicable for set of benefits and advantages associated with the complete supply chain. However he or she will be levied GST by the last dealer of the chain.
  • The GST will not incorporate petroleum products, tobacco and the alcohol utilised for the human consumption.
  • The GST will be incorporating two components, there will be the Central GST which will be collected by the Centre and the State GST will be collected by the State.
  • If there is the context of interstate trade or commerce then Centre will need to collect the GST on it. However if the GST Council recommends then the tax which is collected will be divided into Centre and State.
  • The GST Council should be consisting of the finance minister of Union as the Chairman, the union minister of state of finance and the finance minister of each state to complete it.
  • There is also the bill which has proposed that there will be the needs of an additional tax of 1 % which will be levied on interstate goods. It will be collected by the State for two years or as proposed by the Council of GST.

In accordance with the latest proposal which has been experiencing quite a lot of hindrance is the right to tax the business-to-business transactions. The framing of the rules pertaining to the same will be pursued by a sub group which will be inculcating the officials from both Centre as well as the State. It will have an impact on the e-commerce as well as the e-delivery business.

Source: http://moneydial.com/the-impact-of-the-gst-on-business-to-business-transactions/

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