Difference Between Goods and Services
- Posted By SuperCA
- On 28 December
About
Often pronounced under the same breath, both goods and services aim to provide utility and satisfaction to customers in everyday’s economics. The term ‘Goods’ refers to any item that provides utility and fulfills the needs of the consumer. Whereas, the term ‘services’ refers to an intangible and non-physical identity that cannot be owned, cannot be touched, it can only be utilized. This article focuses on providing you with a complete distinction between goods and services and giving you a quick brief regarding the act which regulates the taxes on these goods and services i.e Goods and Services Act.
Goods VS Services
| Parameter | Goods | Services |
| Nature | They are Tangible | They are Intangible |
| Transfer of Ownership | Possible | Not Possible |
| Separable | Separable from the seller | Not separable from the service provider. |
| Storage | Goods can be stored | Services are unstorable |
| Perishable | Not All goods are perishable | Services are Perishable in nature as they need to be provided at a moment when requested by the consumer. |
| Production & Consumption | Goods have a significant time gap between production and consumption | Services are produced and consumed simultaneously |
| Example: | Notebooks, pen, bottles, oven, etc. | Postal services, banking or insurance services, telecommunication services, etc. |
Goods & Services Act
Every business or entity that is involved in the buying and selling of goods/services have to register for GST. It is mandatory for companies whose turnover exceeds the threshold limit of Rs 40 lakhs or more (Rs 10 lakhs for special category states), to register as a normal taxable person. If anyone wants to get registered voluntarily even if he/she does not qualify for mandatory registration threshold turnover, they can always do so, as prescribed under section 25 of the act.
The registration process is normally completed within 4-6 working days and the applicant will be allotted a certificate of registration by the GST department consisting of a 15-digit GSTIN (GST identification number). If the organizations fulfilling the eligibility criteria carries on business without registering to GST, it will be an offense under GST and heavy penalties will apply.
Advantages of Getting GST Registration
Unified Tax Regime
The amalgamation of a large number of taxes which was levied at a central and state level into a single tax have far-reaching benefits that are both business & consumer-friendly which is bound to make a positive impact on you and your business.
- Lesser compliance
The implementation of GST has altered the complicated indirect tax framework. It has completely changed the way how tax is paid. As GST is a unified and singular tax regime, the number of filings has come down, making it less hassle for small entities to fear of maintaining compliance contrary to the earlier previous tax regime where businesses had to file multiple returns accorded with different indirect taxes.
- No Restrictions on Interstate sales
There are no restrictions on interstate sales which will widen the scope of business for small entities.
Uniform Tax Rates and structure
GST has a view of making a neutral tax regime where every business stands equally in front of authorities irrespective of the choice or place of doing business. Thus the GST tax rates and structures are similar across the country.
Natural Trustworthiness
Getting GST registration not only makes you legally recognized as a supplier of goods or services but also builds a natural trustworthiness towards business from consumers and suppliers. While it also makes you eligible to avail various other advantages and privileges rendered under GST laws.
- ITC Claiming Facility
By getting registered, businesses can avail ITC benefits by claiming the Input tax credit on the purchase of goods & services & can utilize the same for payment of taxes due on supply of goods or services. Only Registered persons can avail the facility of claiming ITC on the purchase of goods & services.
Elimination of cascading effect of tax
The previous indirect tax regime was a period that saw a cascading effect of taxes, but the implementation of GST has almost entirely put an end to the tax-on-tax impact on goods and services. By taking in all the indirect taxes under its wing, GST has brought down the cost of goods and services and brought more transparency in the indirect tax system. This uniformity of taxes under GST is one of its influential benefits.
Documents Required
➢ PAN & Aadhaar card of the owner
➢ Proof of Business Registration/Incorporation certificate
➢ Identity and Address proof of Promoters/Director with Photographs
➢ Address proof of the place of business
➢ Bank Details
Conclusion
Both goods and services are very much essential for the economy to flourish as both of them are growing rapidly with witnessing a lot of innovation. Both services are going to dominate the economy for a long period hence the implementation of Goods and Service Tax (GST) in India was a historical move, as it marked the beginning of a new era in India’s indirect tax structure. GST Implementation has brought more transparency in the entire indirect tax system for the whole country. This multi-stage and destination-based tax framework has supplanted several indirect taxes in the country, such as VAT, service tax, and excise duty.
