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How GST effected Income Tax

How GST effected Income Tax

GST, or the goods and service tax, has become a reality in India now. This could be called the biggest reform in the history of our nation, especially in the Indirect Taxation where around 11 types of taxes would be incorporated into a single tax. There are no doubts in stating that GST has come up to be the game changer for the Indian Economy.

Let’s see how the advent of GST in the Indian Economy has affected the average man and his income. More importantly, let’s analyze the effect of GST on Income Tax.

Effect one: PAN based registration number under GST

As per section 19(4) of GST, all registrations are being linked with PAN but so far State VAT is the concern, they would not be joined with PAN. In the new GST law, a new registration number of 15 digits will be issued by GSTN, would be based on PAN. This clearly states that all registrations would be linked with PAN.

First two digits will represent state code, next 10 digits will be PAN, the thirteenth digit would be issued depending upon the number of registrations a legal entity has within the state. Now, by this PAN-based system, a value of total turnover reported in all returns under GST (CGST OR SGST) will be reported to Income Tax Department by GSTN. Taxpayers would need to reconcile the amount of total turnover from all returns under GST, to the amount as mentioned in the annual financials.

Effect two: Capital Assets

As per section 2(19) of the GST Law, capital assets shall have the meaning as assigned to it in the Income Tax Act 1961, but this expression shall not involve the jewellery held for personal use or any property which is not connected to the business. Also, Input Tax Credit will not be available.

As per section16(10), where the registered taxable person has claimed depreciation on the Tax Component of the cost of capital goods under the provisions of the Income Tax Act, 1961, the input tax credit shall not be allowed on the said tax component Depreciation under the Income Tax.

In simple words, the actual cost of an asset would reduce by the amount of Excise duty which has been claimed as CENVAT. If the auditee has claimed any CENVAT credit under Central Excise rules for Tax Component then depreciation under Income Tax is not allowed for the same. This would be a major step to stop people from using wrong ways to Axe Tax.

Effect three: Halt in frauds to a great extent

Industry trackers say that since the GST data will keep a keen eye on the tax paid by all the companies, it could also be compared with the income tax data of the owners, promoters or beneficiaries of the organizations.

All kinds of occupations and businesses— manufacturers, distributors, retailers — will have to register on the GST network now that the law has full-fledged come to force. Their fraud techniques of Tax Saving won’t work. All the transactions of a company and thereby the revenues and profits would be captured by the GST system. Once registered in the GST structure, tax officials can make a calculated estimate of income that has thrived in over the past few years.

Effect four: Promoting Transparency in filing GST returns

After GST has come into work, you cannot be careless anymore. You need to identify all of your sources of income, under different heads, and mention them clearly when you file your returns. All incomes are classified under five different heads, such as income from salary, income from house property, income from business or profession, income from capital gains, and income from other sources.

Thus, you should identify all your incomes from different sources, just to ensure that you haven’t missed out something while filing your return. Also, you have to report all of your bank accounts, along with all necessary details. Also, you would have to report your exempt income. All in all, the rust has been cleaned and the Income-tax structure has become new and functional, like never before.

Conclusion

In a nutshell, if you are an honest individual, who doesn’t come about increasing they’re through not paying taxes, then definitely, GST would ripe positive fruits for you. The government is putting in a lot of effort to curb the parallel economy and eventual tax evasion in India, we should support them and motivate them to keep going well by honestly working to Save & Earn, and also paying the right taxes!

The post How Gst Effected Income Tax appeared first on Eserviceshelp.in.



This post first appeared on What Are Three Simple Steps For Calculation Of Advance Tax Payment?, please read the originial post: here

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