The implementation of GST from July 2017 has stirred every aspect of Indian markets. A section of the business world is in a panic zone whereas the rest is thrilled about the new regime as One Taxation for One Nation will increase ease of doing business. Start-ups being the one of the emerging segments of the economy can actually use GST as an opportunity instead of seeing it as a threat.
However, to leverage the benefits of GST, one must know the four things that are mentioned below:
Get Started Easily:
Launching a start-up involves investing a lot of time in various processes — right from finding resources, funding and manpower to doing market research.
Firm establishment and related registrations are one of the crucial aspects for a start-up as it consumes a major chunk of time. On the other hand, it is necessary to follow compliances laid by the government of India.
The launch of GST has opened doors for new start-ups to evade a series of documentation pertaining to departments such as VAT, Excise Duty and Service Tax.
Now, once you have a GST number, you are good to go. Filing of GST is easy too and can be done online through a user-friendly website that makes the process even more simplified as there is not a single user-friendly website for even a layman to file taxes.
For a business to have a service tax registration, the minimum turnover requirement during the service tax regime was INR 10 lakh per annum, which under GST law has been increased to INR 20 lakh per annum.
This means that a business doesn’t need a GST Number till it reaches the turnover of 20 lakh and above. However I feel, due to the immense benefits the law brings with it, one should voluntarily opt for GST to leverage its benefits.
Become a National Brand/Freedom of Movement
Every start-up aspires to expand its business and reach out to consumers at the national horizon. However, most of them earlier faced restrictions due to multiple layers of laws and complex taxation systems applied by various states. GST liberates a start-up from these documentations by putting India under one singular tax regime. This means, state borders cease to exist under GST rule and can seamlessly move goods from one place to another sans any worry about taxes applied across different states.
Most of the start-ups have their presence in online rather than offline market-space as it gives them an access to a larger & diverse customer base with least possible investment. The introduction of GST has boosted the start-up culture by significantly decreasing the logistic costs for manufacturers of bulk goods across the nation.
Get Preferential Treatment
GST brings with it a rating system that will make you a preferred business amongst your clients and vendors. GST compliance rating system is basically a system where companies registered under the act gets higher rating for complying with the taxation standards which is made visible to the company’s clientele.
On the other hand, vendors who don’t pay GST affect the entire supply chain which reflects as a poor impact on the company’ rating. As GST of the entire chain is applicable on the ultimate customer, businesses will only opt to work with vendors with positive ratings to avoid losses and disruptions of the chain. The government has set a few parameters such as regular payment of taxes, timely e-filing of GST returns, matching of transactions of outward and inward supplies and transparent reconciliations for positive ratings.
Benefit of the Transparency
Transparency is one of the key-benefits of GST. With the replacement of all indirect taxes with GST by both central and state governments has proved helpful in promoting a transparent structure of business. Though the concept has increased the task of maintaining data and records, this move by the government will prove to be beneficial in the long run. Another advantage of the increased transparency is that products would be prices at the manufacturer’s cost, leading to a decrease in MRPs. This in turn, will lead to an increase in demand and enable more production ultimately resulting into the growth of company.
Read more: Entrepreneur