The Goods and Services Tax is a fundamental revolution in the way we think about indirect taxes in India. It has created a single market, helping move goods seamlessly across state borders. The GST system has enrolled close to 10 million businesses onto a single national technology backbone, the GSTN, and already collected over Rs 3 lakh crores in taxes in less than six months. GST was welcomed because it aimed at creating an incentive for compliance, rather than punishment for non-compliance.
The basic driver of the GST is the Input Tax Credit (ITC). The tax paid by your suppliers, should be subtracted from the tax you pay to the government. The ITC is not a small deal. Without ITC, the tax you have paid becomes a cost. This tax can often be higher than the profit margin of the business. The market encourages Continue reading