As we all know that the Prime Minister of India is motivating and promoting the entrepreneur sector for growth and development, it’s important for start-ups to avail the benefits of GST compliance. GST is a transparent taxation regime which is entirely online based. Individuals need to get registered as a taxpayer, submit the returns, do the tax payment and refund claims. Everything is made possible through GST portal known as GSTN. This will remove the worries of most of the start-ups to visit the banks multiple times for paying taxes or filing returns. Now, they can more focus upon their businesses rather than being worried about the taxation criteria.
Small businesses start-ups whose annual turn-over is less than twenty lakhs are exempted from paying taxes under the GST unless they wish to avail the benefit of input tax credit. It is a big transformation that has taken place and have removed all the complex and multiple indirect taxes.
If we talk about the medium entrepreneurs who deal with the supply of goods and services and the annual turnover is more than seventy five lakhs, they need to register themselves under the GST. They need to get registered under the composition scheme in which the tax has to be paid by the tax payer at a nominal amount.
All businesses whose annual turnover is more than twenty lakhs need to get registered under the GST. The GST registration will enable the businesses to be partners with the Government in tax collection. The benefit that they will be offered is that there will be no cascading effect of multiple taxes due to the systematic and organized input tax credit chain. Small businesses usually lack resources to hire dedicated resources so that they can look after their compliance. However, after the introduction of GST, the compliances have been automated and is made simple for the taxpayers.
It is expected that GST will improve the transportation of logistics in India and will directly benefit the e-commerce or any business involved in the supply of goods and services. Businesses need not require to do the paperwork for the transportation of goods. Quick delivery of goods will reduce the inventory and encourage manufacturers and suppliers to improve their financial growth.
According to the previous taxation system, most of the businesses used to face major changes in their working capital which is sometimes blocked due to taxes and refund claims. However, under the ITC mechanism of GST, everything can be prevented. Moreover, everything included under the GST law is online such as filing, tax paying, return, and refund. Further the deadline of paying tax is in monthly basis by the 20th of the succeeding month. All these measures will improve the cash flow of businesses and will make sure that the working capital doesn’t gets blocked by the tax authorities.
Entrepreneurs who deal with the exportation of goods and services will gain immensely under the GST. IGST paid under the GST will automatically be refunded when the goods are exported from one state to another. They are given the benefit of flexibility in which the exporters can export the goods without even paying the tax and at the same time can claim the refund of Input Tax Credit.
A compliance rating system will rate the businesses according to the tax compliance record. The ratings will act like a guide for perspective customer which assess the risk of engagement with the vendor. Therefore, the businesses that are more compliant-oriented will be given better leverage and attract potential customer. The entrepreneurs performing goods business will be rated more and thus promoting the goods trade.
The Bottom Line
New GST portal is all set to provide benefits to the entrepreneurs with a transformational shift to the new taxation regime. It is expected that GST will enable and facilitate the start-ups with essential resources required for the businesses. Despite of several benefits of GST, there are drawbacks too which the end consumers have to suffer such as paying the huge tax amounts on simpler items. The SGST and CGST have been levied on the consumers on the purchase of any product. Let’s see after a month, how much the GST Bill India will affect the citizens and economy.