Impact of GST on businesses with customers across states
Business with customers across states:
Business is all about making profits and more profits at unprecedented way. However, expanding your business operations to spread to the neighbouring states first and the country is a motive every businessmen have. A curator will always be clear with the current regime of taxation in this case, for uninterrupted functioning of the operations carried out as goods and services. Meanwhile, with the coming of GST law implementation, apart from the obvious finances and efforts that businesses with customers across states, there are also a fair amount of compliance costs and complications which will be taxed both by the seller and buyers too. Moreover, supplying services to customers is more difficult than selling goods to customers in other states once the GST rolls. Coming to selling of goods, IGST will be levied on interstate sales and the incidence of the taxation will be sifted from sale to supply mandatory. What is encouraging here is about the removal of entry taxes and the relative less verification charged once the goods reaches and cross the native state to another state borders. This has a validity of reduction on the price for the customers or buyers. Again, the B&B can be claimed on credit of the IGST charged on interstate supply and set off the same against the customer’s liability towards the state in the order as jotted in the GST law model. This ensures the supplier that he Doesn’t have to in injure any additional cost and this eventually promises to meet the reduction point of the cost for his
customers. This is an advantage for the all the suppliers when compared to local dealers and can have healthy competitive attitude towards them at ease.
Meanwhile, the suppliers are not at lose when it comes to the availability of input credit. Because, selling or buying from different state and within state will be equally conducive to the buyers as of the input tax credit will ensure. Now, the suppliers have another advantage of not wasting money on overrated infrastructure just for compliance, rather he can set up branches all over the different states and yet earmark profits efficiency without fail.
This will surely boost business development and also the inter state trade relations too. Likewise input tax credit will be there for uninterrupted functioning of inter state transactions leading to elimination of the cascading effect. Thus, benefits of the sellers and buyers will be unmovable. What is important here is about the registration of the taxpayers under GST regime, which will deter all the advantages and also the rotten part of the model for the buyers and the sellers. This registration is compulsory for all dealers and customers who are willing to pay tax and is filed under the law of goods and services post. In other words, composition schemes will not be an option for interstate sellers.
Now, coming to the discussion of difficult part of the cascading impact of GST on supply of services to customers across states. Service tax is levied and collected by the centre and thus the registration for the same is also unified and central to the governance. Under pro defined GST law regime, IGST will be applicable when there is an inter state supply of services to the customers. Here, the place of Supply is more important than the rest as the service provider from one state to a client of another state will be under the application of IGST law. However, the type of services matters in determining if there is a need of presence at the client’s location i.e at the state of the client, then, it will be treated as an inter star supply of service ND SGST and CGST will be charged unless of IGST. And the registration should be done in the state of the client.
To confirm, under GST regime, any taxpayers will have to be aware of all the changes and pros and cons of the cascading impact of the new taxation. Therefore rejuvenating the spirit of business and trade in the state and inter state too.