It’s no secret that the old taxation system is out, and the new Goods and Services Tax (GST) regime is in. Although it was met with a mixed response at the time of launch, businesses are slowly becoming accustomed to it which is a good sign.
One of the most highlighted features of GST is the GST Network, popularly known as GSTN. But what’s it exactly, and how has it affected the businesses? Let’s find out.
Goods and Services Network (GSTN)
Simply put, the GSTN is a centralized network set up for the businesses so that they can upload invoices, collect and pay taxes, and claim Input Tax Credits.
One of the many reasons GSTN was developed was to improve transparency by encouraging the businesses to maintain and share their records such as tax receipts, invoices, etc. in a digital format. It also aimed at tackling the problem of tax evasion and for the implementation of governmental policies and regulations in an organized manner.
GSTN is regulated by a non-government and not-for-profit company called GST Network Limited. While the government is involved at the administrative front of the system, the company is responsible for the technological front.
GSTN and Businesses
GSTN has had a huge impact on old and new businesses alike. The following points address some of the changes observed in the industry because of GSTN:
Seamless Flow of Taxes
In the past, it would take a long time for the funds to flow from the Central Government to a State Government. Naturally, the latter struggled with the finances, especially during the weakest moments of the economy. Thus, GSTN was designed to solve that problem and it’s going great so far.
Since GSTN is managed by a private limited company that’s solely dedicated to managing and running the network, the control is greatly enhanced and funds can now flow smoothly through various administrations- thanks to its paperless approach.
Easy Tax Management
Another major change that GSTN has brought is, in the area of tax collection and tax regulation. Previously, payment of taxes was complicated as the laws varied on the basis of the states and the size of the businesses. However, GSTN has been able to bring organization and uniformity in the system for the taxpayers and tax authorities alike. Not only it’s become easier to detect tax leaks and tax evasion, administrative costs have also come down greatly as now the same policies will be administered in the center and the states.
Easy Business Registration
Setting up a business was riddled with all kinds of problems in the pre-GST era. For instance, if a company was selling goods or offering services in different states, then it had to register for VAT with every state’s sales tax department, each having varying rules and regulations. Moreover, the owners had to pay procedural fees for each registration and even deal with the Tax- “Babus” who demanded bribes.
Today, a businessperson can register their company easily with the GSTN portal according to rules and regulations that are the same all across the India. Moreover, there are no middlemen to create unfair interferences.
In a nutshell- GSTN has brought a big reform in the business industry. Having no other option, more and more businesses are adopting ethical practices and contributing to the tax revenue. Corruption in the system is also gradually losing its intensity. Thus, it won’t be an exaggeration to say that in the next few years Indian Economy will grow tremendously with GSTN’s impetus.