GST(Goods and Service Tax)

VS
(Value Added Tax)

Brief Summary of Both the Taxation

Policy
After

the introduction of GST, indirect taxation policy of India

will be subsumed under GST because a line of various taxes
will be included in a single tax law which is GST (Goods and
Service Tax).

Before

GST, the main indirect taxations were VAT, Service

Tax, Excise etc.

Where

VAT is a tax which is added at every point, from

production to the time of sale.

Tax

is added at every stage when the value is added that is

why it is called value added tax.

Return to be Filed
Under

the GST, taxable person will be expected to file the details of all the
sales electronically by 10th day of each month in GSTR-1 succeeding the
taxable month and later on by the mid of month he will have to file the details
of all the purchases in GSTR-2 succeeding the taxable month And annual
return should be filed up to 31st December in GSTR- 8 of next financial year.

Although

In present VAT system the dealer has to file quarterly VAT returns
and at the same time assessee has to file Sales register and purchase
register. And at the end of the year, the assessee is liable to file annual return
too.

Input Tax Credit

After

the introduction of GST Law, this cascading

impact will be eliminated because in GST we can
get Cenvat Credit of interstate sales purchase as
well as in GST we can get credit even after sales
of Services.

While

under VAT system tax credit for CST cannot

be taken against VAT payable so it leads to
cascading effect i.e. tax on tax.

Cost Reduction
The

implication of GST law will ultimately result in cost

reduction of goods as there will be a single tax levied that
is goods and service tax.

While

under VAT law a trader cannot use the credit of other

indirect taxes similar service tax credit etc. For payment of
VAT liability so it will result in a rise in the value of goods.

Tax on Interstate Sales

Under

GST law IGST will be levied in case of interstate sale and purchases.

While

under VAT Law CST is levied on inter-state

purchase and sales of goods.

Input Tax Credit Mismatch

According

to GST law the biggest problem of ITC mismatch will

get solved as all the details of sales will be filed till the 10th day
of next month and all the details of purchases will be filed by
15th of next month and monthly return will be filed by 20th of
next month.

While

under VAT system there is a very big problem of ITC

mismatch as there is no such system for filing details of sales
and purchase by few specified date before filing the VAT return
which gives increase to Input tax credit mismatch.

Conclusion

In

my opinion GST will be a probable solution for

different problems in VAT and other taxation
structures.

Read More @ Diifference between VAT and GST

The Team