IndiaFilings / Learn / Business Startup / Gst Advantages For Startups And Small Businesses
GST Advantages for Startups and Small Businesses - IndiaFilings

GST Advantages for Startups and Small Businesses

The Lok Sabha passed the Goods and Services, Tax-GST Bill, on 6th May 2015. The advantages of GST are the ease of doing business and tax structure. The concept of GST mooted and evolved in India for over a decade now. With the GST Bill passing the Lok Sabha, it is now slated to be presented to the Rajya Sabha. Once cleared by the Rajya Sabha, the Bill would set in motion the rollout of GST in April 2016. The passing of the bill shall transform India's indirect taxation system. In this article, let us review some of the major advantages of GST. In addition, the article also covers the implementation of GST in India for startups and small businesses.

https://twitter.com/IndiaFilings/status/595887073963290624

GST Overview

Goods and Services Tax (GST ) acts as a value-added tax. It applies to all points in the supply chain with credit allowed for any tax paid on inputs for making the supply. Therefore, the end consumer shall bear the tax as the last person/entity in the supply chain. The expectation of introducing GST in India shall result in major simplification of the indirect tax structure. The tax structure applies to both Centre as well as State levels. Furthermore, it shall also replace multiple layers of complex taxation that currently exist in India.

GST will Improve Ease of Starting a Business in India

Any individual/entity establishing a new business in India shall apply for VAT registration. The individual/entity can apply from the State's Sales Tax department for VAT registration. But each State processes VAT with different procedures and fees. Hence, businesses may find it difficult to operate in multiple States. Further many might also have difficulties in obtaining and maintaining compliance with VAT regulations.

With the implementation of GST in India, the procedure for GST registration shall become centralised and also standardised. It shall remain similar to the service tax registration. Under the GST regime, the business would no longer have to obtain multiple VAT registration. As a single GST registration applies across India. Therefore, the procedure for obtaining GST registration would also become standardised. Thereby improving the ease of starting a new business in India without any difficulties.

Integration of Multiple Taxes in GST

Currently, the State Government implements the VAT for the goods and products availed. However, the services are taxed under the service tax regimen as implemented by the Central Government. As State Government implements the VAT each of the State has different VAT rates. Further, it also differs in VAT regulations and VAT procedures leading to complications. In addition to VAT and Service Tax, the businesses must comply with other various other tax regulations. Other taxes include Central Sales Tax (CST), Additional Customs Duty, Purchase Tax, Luxury Tax and others.

Under the GST regime, many of the taxes in existence today shall become subsumed and made into one tax. The following taxes are proposed to be subsumed under GST:

[caption id="attachment_2614" align="aligncenter" width="676"]Integration of taxes under GST Integration of taxes under GST

Central Taxes subsumed under GST

  • Central Excise Duty (including additional excise duties)
  • Service tax
  • Additional customs duty (CVD)
  • Special Additional Duty of Customs (SAD)
  • Central surcharges and cesses

State Government Taxes subsumed under GST

  • Value Added Tax
  • Central Sales Tax
  • Octroi and Entry Tax
  • Purchase Tax
  • Luxury Tax
  • Taxes on lottery, betting & gambling
  • State cesses and surcharges
  • Entertainment tax

GST Exemption for Startups and Small Businesses

Currently, VAT registration and VAT payment remain mandatory for all the business operating within and between states. It also applies when the annual turnover crosses Rs.5 lakh in some States and Rs.10 lakh in other States. The multiple VAT legislation enacted by each State created confusion and complexities. Hence GST focuses on reducing complexities. Thus, after GST enrollment, businesses shall not apply for GST if the turnover results in less than Rs.10 lakh p.a. These business entities shall not collect GST either.

Further, businesses with an annual sales turnover of Rs.10 lakhs to Rs.50 lakhs may have to pay GST only at a lower rate. Therefore, after GST, thousands of startups and small businesses currently having an annual sales turnover from Rs.5 lakh to Rs.10 lakh would be out of the tax net providing relief to them from collection and filing of GST returns.

GST will Improve Ease of Doing Business in India

Currently, businesses like restaurants or computer sales and service - which sell goods and provide services as a package have to comply with both VAT and Service Tax regulations. This creates complexity for the business and they have to calculate taxes for the transaction based on different rates for different items. With the introduction of GST, the distinction between Goods and Services will be gone - thereby making compliance easier. Further, invoicing will be easier for businesses as only one rate would be adopted.

To know more about GST in India, visit IndiaFilings.com

IndiaFilings
Updated on: January 29th, 2020

Popular Post

Download ePAN Card – Get ePan from NSDL & UTIITSL
80 Small Business Ideas

Starting a small business can be a transformative venture, offering the exciting opportunity...

Nadakacheri – Income Caste Certificate Download Online in Karnataka
TDS Rate Chart for Financial Year 2025-2026 (Assessment Year 2026-2027)

Tax deduction at source, shortly and popularly known as TDS, was introduced by the Income Tax...

Divorce Rules in India: Everything You Need to Know
How To Download GST Registration Certificate Online?

Goods & Services Tax Certificate is issued to people who are registered under GST...

PAN Card Cancellation Online
Find Complete Details of GST Registration Procedure

GST registration applies to all individuals and entities supplying goods or services in India. GST...

Check Your PF Claim Status Online Using PF Tracking ID
Gift Tax in India: Applicability, Exemptions and Rules

Gift tax in India is applied when the value of the received gift exceeds ₹50,000 in the...

Check Your PF Claim Status Online Using PF Tracking ID
Old Regime vs New Regime 2025: Which Tax Regime is Better for You?

The Union Budget 2025 has brought significant changes to India’s personal income tax structure, raising the...

Check Your PF Claim Status Online Using PF Tracking ID
What is the minimum turnover for GST?

The Goods and Services Tax (GST) is an indirect tax system introduced in India in 2017. It functions...

Check Your PF Claim Status Online Using PF Tracking ID
How can I check if a trademark is registered?

A trademark search is simply checking if another person or organization does not already own the...

Check Your PF Claim Status Online Using PF Tracking ID
Section 194H of the Income Tax Act: TDS on Commission & Brokerage

Section 194H of the Income Tax Act in India mandates the deduction of Tax at Source (TDS) on commission or brokerage...

Check Your PF Claim Status Online Using PF Tracking ID
Section 80G Deduction - Income Tax Act

Section 80G Deduction is a facility available in the Income Tax Act which allows taxpayers to...

Check Your PF Claim Status Online Using PF Tracking ID
Crypto Tax in India: Taxation On Cryptocurrency

The Income Tax Department (ITD) has not provided specific guidance on crypto taxes for Indian investors. However...

Check Your PF Claim Status Online Using PF Tracking ID
Internal Audit Applicability Under Companies Act, 2013

Internal audit applicability is a critical concept for companies in India, impacting various...

Check Your PF Claim Status Online Using PF Tracking ID
Difference between Private and Public Company

In the business world, two main types of companies exist: private company and public company...

Check Your PF Claim Status Online Using PF Tracking ID
New GST Rules for Rent

Ministry of Finance vide a Notification No 05/2022- Central Tax (Rate) dated 13.7.2022 has issued...

Check Your PF Claim Status Online Using PF Tracking ID
GSTR-1 and GSTR-3B Due Date Extension - New Due Dates For January 2025

The Central Board of Indirect Taxes and Customs (CBIC) has recently announced an extension...

Check Your PF Claim Status Online Using PF Tracking ID
Different Depreciation Rates under Companies & Income Tax Act

Depreciation is a key concept in finance and accounting. It helps us manage how the value of...

Check Your PF Claim Status Online Using PF Tracking ID
Form 10IA - Section 80DD Deduction

Form 10IA of the Income Tax Department must be filed by taxpayers claiming income tax deduction...

Check Your PF Claim Status Online Using PF Tracking ID
GST on Used Cars: New 18% Tax Rate Explained

The Goods and Services Tax (GST) system in India has been a significant reform in the country's...

Check Your PF Claim Status Online Using PF Tracking ID
MSME Registration - Udyam Registration

India's Gross Domestic Product (GDP) benefits significantly from the substantial...

Check Your PF Claim Status Online Using PF Tracking ID
Section 43B(h) - New MSME 45 Days Payment Rule

The Finance Act, 2023 introduced the MSME 45-day payment rule under Section 43B(h) of the Income Tax Act...

Check Your PF Claim Status Online Using PF Tracking ID
Direct Tax Vivad Se Vishwas (DTVSV) Scheme, 2024

The Direct Tax Vivad Se Vishwas (DTVSV) Scheme, 2024, was announced by Union Finance Minister...