4th April 2017
GST (Goods and Services Tax) has been one of the most talked financial introductions of India in the recent times. After facing a lot of political blockade – expected in a democracy like India – the bill was cleared by both the houses – Lok Sabha and Rajya Sabha – paving way for it to be adopted at the national level. This system of tax collection is already in use in countries across the globe. In fact, some of the affluent countries like the UAE and the USA have adopted GST long time back. Although, the Indian GST have clauses making it slightly different from those adopted in other countries.
Indian economy is booming, it is spreading its wing with each passing day. And one of the major contributing factors in that growth is start-ups. With more and more entrepreneurs floating news ideas, the Indian start-up industry seems to be in safe hand. These are still nascent days for the industry and even the investors are patient with return of investment. Once a start-up gets funding, it takes a bit of time to find its footing and gradually progresses to make benefit. How will GST affect the start-up business then, especially in India where every change – positive or negative – is met with different responses?
Easing down the entire process
One of the first steps of starting a business in India involves getting VAT registration from the Sales Tax department of the state the business is getting started in. However, if the company wishes to operate in multiple states it becomes a tedious task as every state has different VATs. This is where GST makes the entire process smooth. Since it will be a centralized tax, getting a single registration done anywhere in India would suffice for those seeking to operate in different parts with the confines of the country.
All under one roof
The current system of tax collection in India requires the states to collect the tax under VAT and further the service tax is charged as implemented by the central government. As different states have different VATs, this only leads to complications. But taxes are not limited to these entities, businesses are required to Central Sales Tax, Custom Duty, Purchase Tax, Luxury tax and what not. With GST, it will all be one. Imagine the time and energy it will save of the young entrepreneurs who have a lot at hand to sort out.
Currently VAT is mandatory for companies generating a turnover of 10 lacs or more. In some states, it is more stringent and any business generating a turnover of 5 lacs or more has to comply to VAT. Once GST comes into effect, no company with a turnover of less than 10 lacs will have to register or collect GST. Not only this, businesses with a turnover between 10-50 lacs will have to pay the GST at lower rate. If this does not sound favourable, it is tough to guess what else ever will. GST is perhaps the best thing that could happen to start-ups and small businesses.
Removing the line between service provider and goods provider
The system in place in India these days requires companies like restaurants and computer sales and services to abide by both VAT and Service Tax. This leads to a complex situation as the businesses need collect taxes on transactions which have different rates of different products. Once GST is implemented, there will be no segregation between goods and services and it will make the invoicing easy due to an uniform rate.
Seeing all these points, now we know why the introduction of the GST has been so well received by the business fraternity of India.
2017 © Monetic Corp Consultants Private Limited - U74999DL2013PTC261819
Download GST E-book, An introductory guide for Goods and Service Tax by Registrationwala.
Like every GST liable business, you'll also need a GST software. Registrationwala has come up with a return preparing and filing software GST Tool.
To schedule a online demo, submit your details.