The present news is making the
buzz in the country, GST goods and services tax is surely a relief for the tax
payers, as they are now estimated to pay a single combined tax in its place of
the superfluity of taxes like Central Excise, Octroi, State Value- Added Tax,
Service Tax, and many other subsidiary taxes. Combination and transformation of
procedure of indirect taxation will now be made with ease and more efficient. The
GST bill is supposed to fuel the
economic integration of the Indian economy.
Considering this tax will be charged
on sales, production, and consumption of goods apart from services at the State
government and Central government levels, it is rest certain that the
difference between Goods and Services will be diminish progressively, making
sure tax compliances become easier. It as well, is appealing to know that the
country is taking one more step towards development with GST as most of the
countries that are developed use this form of taxation, not only for ease and
convenience but to avoid double taxation too.
Goods and Services tax will be
allocated on transaction value that includes contract, packing cost, and all
other expenses acquired for sales. Whereas, every other state is in support of
the bill, the government of Tamil Nadu feels that this bill may take away the
independence of the State government.
Some of the main influences of
GST on startups in India are as follows:
1)
Immunity
for new businesses:
Currently, businesses with gross
revenue of more than INR 5 lakhs should get VAT registrations and pay VAT. But,
GST will rise this limit upto R 10 lakhs and above. The industries with earnings
between Rs. 10L and 50L will be taxed at lesser rates. This will definitely help
to reduce tax burdens on freshly established businesses. In addition, GST will bring about an ease in
launching new businesses. For instances, new businesses require a VAT
registration from sales tax department, other than undergoing many processes
and fee payments in every state. Here, GST comes in a welcome change, carrying
out uniformity in the process. Goods and Services Tax will allow centralized
registration, thereby encouraging business startups, and developments.
2)
Relief
for sales and services sectors:
One of the most complex
businesses is restaurants that are both into services and sales, go down under
two taxations, i.e. food and service. Therefore, they calculate both VAT and
service tax separately, creating the whole calculation process very complicated.
GST comes as a relief to this sector in which the taxation will not distinguish
between sales and business services,
making sure tax calculations are done on the total amount.
3)
Cost
Reduction- transportation & logistics:
GST will make sure that the
interstate movement becomes inexpensive and is less time consuming, by eradicating
small border taxes and resolving check post issues. This will unavoidably
decrease the number of costs connected with upholding greater stocks, as there
will be a smooth movement of goods.
4)
Simple
revenue system:
At the moment, startups expend a
lot of energy, time, and hard work in organizing innumerable taxes at innumerable
points. Considering and then following unlimited rules and regulations at
different States makes the procedure of setting up a new business a very
complex affair. Goods and services tax not only simplifies the process by
incorporating all the taxes to be charged but as well makes the whole process
of tax paying an entire lot simpler.
5)
Benefit
for online startups:
With no doubt, goods and services
tax has demonstrated a blessing for all the business startups operating through
e-commerce platform. There are various startups that are operating in the
cyberspace and are offering products by means of the internet. The earlier
taxation regime had been making hurdles for them as they had to pay various
taxes in each state. But, GST execution will set them free from these hurdles.
In general, GST will be a blessing
for business startups and various other sectors. It is estimated to be a large
savings for logistic, manufacturing and retail companies. But, decision other
sectors dealing with luxury products such as tobacco products, cars, etc. will
face higher tax rates between 27%-40%, as per market research.
There are numerous arguments that
are clouding the sky of GST. Above mentioned advantages, with others are being
spotlighted by those who concur with the pathbreaking tax reform. The critics
of goods and services tax hold different views and are raising arguments in the
direction of revenue losses which the state might incur. But, the Centre has
taken this into factor and has made a provision to redress state for any losses
created by them as a consequence of. Therefore, it won’t be wrong to plan that
GST’s positives be more important than its negatives and it is certainly going to
reform that way startups were operating.
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