Benefits of GST for Small Businesses and Startups in India


Benefits of GST for Small Businesses and Startups in India

It is an indirect tax that has largely replaced other indirect taxes in India, such as excise duty, VAT, and service tax. The GST Act was passed by Pa

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It is an indirect tax that has largely replaced other indirect taxes in India, such as excise duty, VAT, and service tax. The GST Act was passed by Parliament on March 29, 2017, and went into effect on July 1, 2017. This article will look at the GST benefits for small businesses and startups in India.

Since the government passed the new GST act, Indian taxpayers have experienced significant relief. Implementing this new GST act has resulted in a substantial reduction in other taxes.

Almost all of the major areas where GST has made significant contributions are employment and increased opportunities for startups and entrepreneurs in the form of a civilizing ease-of-doing-business index, accumulation of job prospects, civilizing cross-border trade, and much more.

GST Advantages for Small Businesses and Startups


  1. It has improved logistics efficiency.


It is critical for India’s logistics industry to sustain and maintain various warehouses across the country. It ensures that the current CST and state entry taxes on interstate movement are avoided. Warehouses that are operated below their operating capacity raise operating costs.


Interstate movement of goods is permitted, resulting in warehouse consolidation across the country. And a big thanks goes to GST, which has united India by removing all restrictions on inter-state trade. For example, Nagpur, India’s zero-mile city, has taken the first step toward establishing a warehouse. As a result, it is the result of GST that has piqued the interest and investment of various e-commerce players and warehouse operators.


As a result, reducing unnecessary logistics costs will boost profits for startups involved in the transportation of commodities.


  1. It has benefited from the widespread use of online registration.


GST has taken control of other taxes such as Excise Duty, VAT, Services Tax, Sales Tax, and so on. The company only needs to register for one tax, GST. We can say that GST is divided into IGST, CGST, and SGST, but the good news is that only one registration is required to use all of them. As a result, the biggest benefit is that a lot of time and physical paperwork is saved because most uploads are done online and are digitally signed. Different states require separate registration, but the process remains the same, which is done online and verified, and authenticated.


  1. It provides access to a common national market throughout India


This is regarded as a significant opportunity for small businesses, as previously most industries were required to maintain massive distribution and logistics networks to meet the minimal requirements of state-level tax. This common market across India is ideal for small companies and businesses looking to expand their national footprint with minimal investment.


  1. It eliminates the tax cascading effect.


The advantages of GST were applied to all indirect taxes under one umbrella. In simple terms, the cascading effect was Tax on Tax, and to mitigate this, the ITC (input tax credit) was highlighted as a significant benefit to businesses.


  1. GST raised the threshold for small businesses to register for GST.


To lessen the conformity press gang on small businesses, the GST convention has established a once-a-year takings limit of Rs.20 lakhs for GST registration. Businesses with less than this amount of revenue should avoid registering for GST. Of course, in North Eastern states, this perimeter stand is reduced to Rs.10 lakhs. Taking includes specific sales and sales through samples, which should be kept in mind when calculating your turnover.


As a result, the assistance of the GST in question has positively exaggerated various areas of the Indian economy. GST has advantages depending on the industry you work in. GST is a low-cost registration fee that can benefit the Indian budget in the long run.


  1. GST will make it easier to start a business in India.


Any individual or entity establishing a new business in India must register for VAT. The individual/entity can apply for VAT registration through the state’s Sales Tax department. However, each state has its VAT procedures and fees. As a result, businesses may find it difficult to conduct operations in multiple states. Furthermore, many people may have difficulty obtaining and maintaining compliance with VAT regulations.


Finally, aside from the beneficial modifications in legal provisions, several ground-level realities must be addressed with caution. Multiple tax authorities will confront practical obstacles in describing the operation of new business structures. According to the GST guidelines, it is predicted that the current state tax borders would be reduced to a great extent.

Some of the benefits we may perceive in this regard are:

  • Goods may be transported effectively.
  • Costs for storage and shipping will be decreased.
  • The supply chain is the exclusive function of business requirements

The adoption of the new GST system in India has provided several tax benefits to startup enterprises, but it has also resulted in several drawbacks for them. If we look at some of the drawbacks, the list includes complications in claiming the input tax credit, multi-tier GST slabs, and a decrease in operational efficiency owing to the increased frequency of tax filing, which will take some time to adjust.

In addition, entrepreneurs in India continue to struggle with a shortage of working cash. Nonetheless, the new GST requirement might be viewed as a significant step forward by the Indian government in the direction of developing a completely automated tax system.