GST Bill Advantages for Startups & Small Business in India - Benefits of Gst Bill
With the Goods and Services Tax (GST) bill passed yesterday in Rajya Sabha, it is all set to be a law soon and is set to be applied across the length and breadth of our country soon.
"Goods and Services Tax" would be a comprehensive indirect tax on manufacture, sale and consumption of goods and services throughout India, to replace taxes levied by the Central and State governments. The entire nation is set to benefit by GST in total, but Start-ups have some more reasons to celebrate it.
Simplification of the tax structure by the government simply means that now the start-ups can be more pioneer and ground breaking in their business models. GST will help to build more favorable conditions for business houses to do business in India.
Let’s take a deeper look on how exactly the GST would be affecting the Indian Start-ups with its new tax structure:
1. Easy Business:
In the present scenario many of the start-ups, to be particular the start-ups in the e-commerce domain are facing a lot of tax related problems. The problems differ for every state as every state has a different tax structure. With the GST coming in, the tax structure would now be uniform and this will help in the smooth functioning and the best part would ease in the scale up process for Indian Start-ups.
2. Easy Logistics:
Today, with the fierce competition in the e-commerce space and with multinationals joining with deep pockets. The battle has gone from bad to worst. With the same day delivery concept coming in and being accepted by the Indian buyers, the start-up can’t afford to get their parcel jammed at a state border post on some taxation issue. Interstate transport would be cheaper as the border taxes would be abolished.
3. Higher Tax Exemptions:
Taking into consideration the current tax structure, any business that has a turn over greater than Rs 500000 had to mandatory register itself for VAT and pay the same to the government. With the GST coming in, the limit has raised up to Rs 1000000. On top of it, businesses with turnover from Rs 1000000 to Rs 5000000 would be taxed at a lower rate.
4. Simple Tax Process:
A start-up today has to spend a lot of its time, efforts and money in understanding and then implementing the complex taxation procedure. GST will help in integration of all the taxes where by the start-up has more time to do business. Restaurants for example till now have to calculate the VAT and service tax on both items separately. GST will not differentiate between sales and services, whereby the tax calculation will be done on total.
GST is certain to have a far reaching effect on all of the society. The business world is certainly to be affected with it. Start-ups in particular now have to cope up immediately with this change happening. Start-ups now need to know which taxes to pay, how the tariffs apply, the quantum of the taxes and the procedures for calculation.
GST was certainly the need of the hour. It will make the entire federal system accountable to pay taxes. Start-ups will also be able to play a bigger role of India’s economy raising the overall GDP.