GST is the replacement of all the indirect taxes which are levied on goods and services around the nation. It is a comprehensive tax structure on manufacture, consumption of goods and services, and sale throughout India to replace the existing taxes levied by the central and the state government. The main aim of GST is to centralise the taxation for businesses which is to relieve them from the burden of compliances and better managing the cash and finances. In this reform, taxation got consolidated instead of the plethora of taxes such as central excise, service tax, central surcharge &Cess, Entry tax, purchase tax, entertainment tax, luxury tax and few other indirect taxes. This streamlined process became easier and effective in the system of taxation.
GST is absolutely helps for the economic growth of the country. Before the implementation of GST, if, for example entrepreneurs who have interest on businesses in six states need to deal with the six different tax authorities along with the six different tax rates in VAT paid by them. But, while filing in GST, they need to execute only two types of registration, one is for State-GST (SGST) and another one is for centre (CGST). With this important note, all the states in India will be having the same tax rate which brings down the logistics cost for many more businesses. This is a point where the Indian start-ups can stand to gain considerably through the implementation of GST.
Benefits of GST:
Easier to do business:
GST brings uniformity in process and centralized registration that makes starting a business and expanding in different states which is much simpler. Start-ups lack the resources in order to hire the team for handling tax compliance or tax experts; GST’s ultimate objective is to simplify the tax regime by reducing the multiplicity of taxes. This is not only useful for compliance down but also makes the taxation very transparent with the digital processing. The very own Do It Yourself (DIY) model enables the business personalities to complete the registration, tax payments, tax return submission, claim the refunds through online, updating all the details online which saves the money for all sorts of business enterprises irrespective of sectors.
Higher exemptions to new businesses:
GST introduced the composition scheme which empowers that the small businesses with the turnover between (20-50 lakhs) need to pay lower taxes. This brings the respite from tax burdens to newly established businesses. In the existing system, a business with a turnover of 5 lakhs was to get VAT registration. According to GST, the threshold limit for registration has been increased to 20 lakhs; this probably reduces the burden for the start-up people and for their businesses.
Reduction in logistics cost:
GST ensures that the interstate movement becomes cheaper by eliminating the border taxes and resolving the issues related to check posts. This is inevitable in terms of cost associated with the stocks, as there will be a smooth movement of goods. It reduces the logistics costs of companies which produces non-bulk goods.
GST enables the financial inclusion in the economy in near future. The start-up community migrated towards more digitized. According to the CRISIL analysis report, GST is playing an intricate role for boost up the country’s GDP and reduces the fiscal deficit. It benefits both for the government and the tax payers.
Without any speculations and the initial problems, GST appears to be a radical reform which ensures the streamlined economy with the reduced costs.