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.

What is the difference between a VAT and a GST?

With the advent of GST, the rules of the old vat are not depended upon anymore as most businesses are required to apply for GST registration. The difference between the Vat and GST lies in the way the extra taxes are filtered and how all the taxes will no longer be separated.

To know more about the difference between the current taxation and the new GST tax in India you will have to know more about the GST tax. 

GST is actually a tax policy that means one market all around the country. This system actually reduces the complicated structure of taxation as it creates a common market. This also reduces the burden of a tax payer as it brings down the indirect tax and also the import and exports taxes.

The business that has an income lower than 20 lakhs is not required for registration in GST.

GST removes the cascading effect of several taxes that the tax payers pay.

In India, the GST tax will finally replace almost all the indirect taxes and encourage a common market with an easy tax structure and simple tax payment. 

The cost levied on all the commodities will drop, thanks to the GST implementation as it does away with the tax on tax syndrome.

Differences Between the Vat and GST

The VAT and service tax are taken separately as VAT is considered separately for goods and separately for service while the GST is common for both of it, making it simpler to follow.

The several indirect taxes together increases the tax and with every state having their own tax rate, increases the amount of tax rate as the goods are transported from one state to another. This results in a cascading of taxes and with the implementation of GST, such problems can be avoided.

GST will also do away with the differences in the structure of taxation between the states and this will lead to single indirect tax.

Central and state governments

GST will make the tax compilation better and seamless with the transfer of input tax credit from one stage to another.

GST will also be reducing the tax collection of the government and hence lead to higher revenues.

Consumer

Due to a high tax rate on every item and the increasing value when it reaches the consumer flummoxes them as they do not understand the exact process of the implementation of taxes as it is a real complicated process.

Thankfully the overall tax burden will reduce considerably and the consumer’s burden will also reduce significantly.

The GST is implemented and it will leave an impact in the every sector. Some of these impacts can be temporary in some of the others it is permanent. 

The impact is actually expected at a high rate as the transformation in the game of tax will either see a slight or a huge leap in the world of business and of course it all depends on the different category of business. Every sector will feel a different kind of repercussions.