How will the GST impact your start up business?

The GST bill is supposed to bring about a great change in the Indian economy. GST helps streamline the whole process of indirect taxation and this helps make it more effective. 

The tax payers shall get a little relief as it will pay one consolidated tax instead of a number of taxes that includes service tax, state value-added tax (VAT), entry tax, central excise, octroi or entry tax and a few other indirect taxes as well. 

Most of the developed countries have already been using this form of taxation. This helps in simplifying the entire tax structure and also avoid the double taxation.

The GST will be levied on the price which is actually paid or payable it is also known as the “transaction value.” which includes packing cost, commission, and plenty of other expenses incurred for sales. 

This tax will be payable at the final point of the consumption. The GST will have two components – the Central GST and the State GST. This is easier to legislate and administer the respective taxes.

 Is the Implementation of GST a good news for Start-ups?

GST is thought to be a perfect for businesses in India, but is it good for small businesses too? Read start-ups?

1.    It helps ease a new business: When a new business starts you need a VAT registration from sales tax department. A business has to face many teething problems with issues regarding procedures and fees in the state. The two things that GST does is it brings about a uniformity in the process and propels an easier start to business and also a centralised registration.

2.Ease of tax burden: The current tax structure dictates that if any business which has a turnover of more than Rs five lakh, will have to get VAT registration and pay VAT. GST has a higher limit and has risen up to Rs 10 lakh. So, businesses have a turnover of Rs 10 and 50 lakh will be taxed at lower rates. This will help ease off tax burdens and a great reprieve for new businesses.

3.    Taxation process is simplified: Sticking to various regulations at different States make the process slightly more complex. GST will simplify the taxes, making the process of paying taxes simpler.

4.    Reprieve for businesses in both sales and services: Businesses such as restaurants, which are under the purview of both sales and service taxation are supposed to calculate the VAT and service tax on both items separately making the calculations process extremely complex. GST does not distinguish between sales and services, and the tax calculation is done on the total.

5.   Minimization of logistics costs across States: There are a number of transport vehicles that get delayed during the free movement across States as there are two issues to be dealt with, small border tax and also check post issues.  With the GST the Interstate movement lessens and also saves big on time, as these taxes are eliminated.

Thus the GST has a positive impact on small business and start-ups as there is a simpler taxation system.