Goods and Service Tax – GST – By: – Swati Dodhi – Dated:- 15-3-2012 Last Replied Date:- 30-12-1899 – Goods and Service Tax (GST) As the introduction of the Goods and Service Tax (GST) gathers momentum, the businesses in India have started bracing themselves. GST, which is likely to subsume most of the current indirect tax levies, is expected to be the most efficient indirect tax system in India. GST would be a single comprehensive indirect tax to be levied on goods and services. It would be levied at every production and distribution leg with the eligibility to claim set-off of most indirect taxes on procurement leg. Under the current regime, there is a fractured credit mechanism; businesses don't get credit for all the taxes they pay.
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n enhanced logistics cost. For instance, to avoid the burden of CST, the businesses open distribution centres in all the States, which lead to additional logistics cost. With the introduction of GST, the businesses may re-define their supply chain and structure the same in a most economic and efficient manner without worrying about the indirect taxes – for example, the businesses may not need to open distribution centres or warehouses in each and every State; they can operate from a place most convenient for their business from a commercial perspective. This would not only allow the businesses to save the inventory and warehousing cost but would also reduce the unwarranted compliance requirements under indirect tax laws in each and every st
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from 10 per cent currently to 16 per cent under GST. Besides the fact that GST is likely to have an impact on the pricing of goods and services, the cash flow of businesses may result in favourable swing. Unlike the current regime, no input tax would become cost under GST and could be set-off against the output tax liability instead of cash payment. REVAMP OF BUSINESSES GST would not just require the businesses to re-define the supply chain but also to re-design their accounting and IT systems. The transformation would require the businesses to revise the formats of invoices, purchase/sales registers, stock registers, reporting declarations to factor the changes under the GST regime. The IT systems would have to be reconfigured accordingly.
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