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GST Advantages for Startups and Small Businesses

Anil Tanwar
25th Apr 2019
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GST Advantages



GST was rolled out in India to change the circuitous tax assessment framework. Further, GST was introduced with a slogan of One Nation One Tax to ease the compliance procedure. In this article, we survey a portion of the significant focal points of GST execution in India for startups and small businesses in India.


GST Overview


Goods and Services (GST) is a destination based value-added tax, collected at all focuses on the production network with taking inputs into consideration. Along these lines, it is the end customer who bears the GST as the last individual in the production network. The presentation of GST in India is relied upon to result in real rearrangements of aberrant assessment structure at both Center and State levels – supplanting the various layers of complex tax assessment right now existing in India.


No Late Fee for GSTR-1 and GSTR-3B Return


31st GST Council provided the greatest help stretched out to startup and small businesses by waving off of late fees on GSTR-1 and GSTR-3B return. The GST Council has declared:


Therefore, filing GSTR-1, GSTR-3B and GSTR-4 until 31st March 2019 did not draw in any late fee.


GST Annual Return Due Date Extended


Every entity under GST is required to document annual GST Return in GSTR-9 form. Generally, 31ST December of every calendar year is the due date for filing GSTR 9 (GST Annual Return) for the financial year of that particular calendar year. As GST is recently introduced in India, the Government and GST authority has chosen to expand the due date for filing GSTR 9 (Annual GST Return) to 30th June 2019. However, the due date for GSTR 9 was initially extended up to 31st March 2019 but GST council has additionally stretched out this date of filing to 30th June 2019.


Ease of Starting a Business in India under GST


With the execution of GST in India, the method for registration of GST would be standardized and centralized similar to registration under service tax. Under GST routine, business would never again need to acquire various VAT registrations– as a solitary GST registration would be appropriate all over India. The system for acquiring GST registration would likewise be centralized, consequently improving the simplicity of beginning another business in India.


Practical challenges


While the GST authorities have introduced many changes in the GST laws but, on the contrary, the floor-level realities are very distinct. And this has offered extra opportunities to the new business model for improving business avenues. Other benefits below this aspect are:


  • Reduction in time for transportation of goods
  • Storage and transportation cost reduction
  • The supply chain is anticipated to be the sole function of requirements of business
  • Development of warehousing hubs which can be organized and towards dense client geographies


One India One tax is predicted to yield huge advantages and possibilities for startups, specifically in the e-commerce operator and logistics sector.


Subsuming Multiple Taxes in GST


Under the GST regime, a significant number of the taxes are subsumed and made into one tax. The following tax will be subsumed under GST:


Central Taxes subsumed under GST


  • Central Excise Duty (counting extra extract obligations)
  • Service charge
  • Additional traditions obligation (CVD)
  • Special Additional Duty of Customs (SAD)
  • Central additional charges and cesses


State Taxes subsumed under GST


  • Value Added Tax (VAT)
  • Central Sales Tax (CST)
  • Octroi and Entry Tax
  • Purchase Tax
  • Luxury Tax
  • Taxes on lottery, wagering and betting
  • State cesses and additional Taxes
  • Entertainment Taxes


GST Exemption for Startups and Small Businesses


Under GST Regime, organizations with a turnover of under Rs.40 lakhs per annum would not need not to take registration under GST. Accordingly, many startups and small business having an annual turnover of Rs.5 lakh – Rs.40 lakh would be out of the assessment. This will help them to grow as they need not file GST Returns.


Simplification of Compliance Procedure under GST


Previously, businesses such as computer dealers, restaurant– which sells merchandise and gives benefits as a bundle needs to comply with both VAT and Service Tax guidelines. The businesses need to figure out taxes on the supply as different rates were applicable for different products. With the presentation of GST, the differentiation between Goods and Services has been refined – in this way making compliance procedure under GST simpler. Further, invoicing is simpler for organizations as just a single rate has to be embraced.


The Conclusion


Just as a startup having an innovative idea is required to be executed well. GST plays the same role that needs to be implemented in a proper manner so as to achieve the intended impact. Moreover, the GST rather than a rebooted version of the old, inefficient model of taxation is a facilitative and efficient tax regime. At last, we can conclude that GST is playing a vital role in providing a boost to startups in India, and help achieve their potential.

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Authors
Anil Tanwar

Highly motivated, analytical and result-driven tax consultant having expertise in GST and E-Way Bill Compliance. Also, leading and managing all aspects such as implementation and functioning of GST process.

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