GST: The Goods and Services Tax, the GST bill was passed by Lok Sabha in 2015. The GST concept was evolved and mooted for more than a decade. GST merges and streamlines the indirect taxation procedure. Instead of paying many taxes such as VAT, Central Excise, Entry or Octroi and Service tax, the Indian citizens will pay GST as a merged one.
Sales and Utilization of goods & services, production are imposed with GST at the State and Central Government levels. Most of the developed nations keep up with such type of tax collection to maintain their countries from the double taxation system.
GST is payable on “transaction value” which will incorporate commission, packing cost and all other different costs acquired from sales. At the last point of consumption GST is payable. The two parts of GST are State and Central GST which will enable both the Governments to endorse and control their separate taxes.
How does GST help for Startups in India?
Exemption for startups and small scale business:
As per the current structure of the economy, if a business has a turnover of more than Rs. 5, 00,000 has to be registered for VAT and should pay VAT. After the GST implementation, organizations whose turnover fall between 10, 00,000 and 50, 00,000 the payable tax is reduced to lower rates. It is a huge relief for recent startups from taxation.
Beneficial for both Sales and Service sectors:
Business like restaurant had to pay both VAT and Service Charge independently. This situation was really intricate for the business people. GST made the expense computation as an aggregate amount.
Umpteen startups established:
VAT was compulsory for any new business and some entities have branches in each state. Those people met plenty issues related to the diverse procedures and applicable charges in each state. GST implemented a centralized registration that helps the startups to expand its branches in various states without any pester.
Cut down of Transportation Cost across the Country
Check-post and border tax issues excessively reduced the fast mobility of transport vehicles. When these are wiped out Inter-state development and transportation will be less expensive with no tediousness. Keeping high stocks, expenses are cut down by GST and movements of goods are made easy. CRISIL investigation states that GST can decrease logistics expenses of organizations who deliver non-mass products such as steel, grains, and manures by 20 percent.
Easy Taxation System
At this present situation, a startup entity considers on time and vitality in dealing with the distinct taxes. After the GST introduction, the complexity involved in taxation is well reduced by incorporating all expenses and made the tax payment easy. The lower tax burden could convert into lower prices on goods for consumers in the long run.
GST incurred on input costs can be covered by the manufacturers, suppliers, retailers and wholesalers as tax credits. It declines the cost of business and enables fairer prices for consumers. GST brings better compliance with transparency. Companies which are running as unorganized sectors will be taken under a tax regime.
GST for consumers:
Consumers do not have idea on the extent of taxes paid on goods. After buying goods along with VAT for the purchased cost the consumers receive bill. This is an understatement of actual tax paid by the consumers. One thing should be remembered that the product before reaching the retail outlet, the excise duty is collected by the Central Government. The excise duty extent is not at all mentioned in the bill. But GST benefits the customers by taxing the consumers at the point of consumption. Say for instance, a dress is taxed 20%, it will be the inclusive of both State and Central Government taxes.