With the implementation of GST, Indian taxpayers have a big belief that GST will be the one tax that subsumes all the taxes and diminishes the cascading effect of various taxes.
GST regime based on One Nation, One Tax. GST has immensely contributed to employment by providing opportunities.
5 Benefits Of GST for Small Businesses and Startups In India
Here are the Benefits Of GST that we are covering in this blog one by one.
Facility To Avail Input Tax Credit
Most of the startups in India are in the service sector. Prior to GST, they were required to collect and remit service tax to the government. The non-utilization of service tax paid on various purchases made for business was one of the main concerns, but with the implementation of GST,we availed ourselves of the facility of the input tax credit.
What Is An Input Tax Credit?
Input Tax credit means that at the time of paying any tax on output, you can reduce the tax that you have already paid on inputs.
How Do I Claim Input Tax Credit Under GST?
To avail of input tax credit under GST, a dealer must possess a tax invoice, debit note, or credit note issued by the supplier and must have received goods or services, Filed the returns and further must ensure that the tax charged has been paid to the government.
Thus, it is proving to be a big boon to the startup industry, which is mainly engaged in services.
Reduction In The Cost Of Transportation And Logistics
With the implementation of GST, it has been a welcome move for startups. As GST has taken over the Octroi and CST, along with other varied tax requirements in different states, the tax has been reduced significantly for the movement of goods and services across multiple states.
GST has united India for the movement of goods, removing restrictions on interstate commerce. Earlier, Logistics players in India used to have multiple warehouses across different states to avoid CST and state entry taxes, but with GST implementation, it has resulted in a reduction in the cost of Transportation and logistics.
Benefits Of Expansion
GST is beneficial not only for businesses and industry but also for the government and customers. GST is a single tax on the supply of goods and services. There is also the benefit of expansion, as if the supplier wants to expand the business by taking a loan from the bank, they can easily get one when they are registered under GST and filling out returns on time.
Composition Schemes For Small Business Owners
The GST composition scheme is ideal for small business owners. This scheme allows a business with a turnover of less than 1.5 crore to pay GST at a fixed rate based on the ease of doing business. Businesses enjoy higher liquidity since a lower amount of GST has to be paid to the government.
Ease Of Doing Business
The goods and services tax, India’s biggest tax reform, is a new indirect tax that provides ease of doing business to suppliers.
With the implementation of GST, it is easier to fill out a single return than multiple returns. There will be no tax on tax, which will reduce the cascading effect. It will also help eliminate black money and corruption because of the transparency it seeks to bring in. The procedure for registering GST is also easy and provides a matching concept mechanism by filling out returns of sales and purchases.
As we have discussed the benefits related to GST Registration, now comes the point: is GST registration required for Startups In India?
GST Registration Is Required In The Following Cases
- GST registration is important for startups that are supplying services or products on eCommerce portals.
- For TCS/TDS deductors
- For Casual taxable individuals
- For Data recovery service providers
- It is necessary for the input service providers and supplier agents who are looking forward to the advantages of ITC.
- GST on startups applies to companies with an annual turnover of more than Rs. 40 lahks or more.
Impact Of GST On Startups
The goods and services tax (GST) is a boon to small and medium startups in India. Nevertheless, as with every new system, it also carries some barriers, which are as follows:
1. Tax Burden On Startups
It is mandatory to upload invoices and make e-way bills on a real-time basis. So startups have to comply regularly with tax compliance.
2. Technology Challenges
As all the GST compliance, returns and fillings have to be done online, small startups and businesses might face some problems.
GST has its challenges, which will impact it in both positive and negative ways. It’s clear that the GST has a more positive impact on small or medium enterprises. If you are a Startup, you would certainly like to bring on board a team of professionals who will guide you in every way. We at JustStart would hijack all your taxation worries and give you the best solutions.