India’s overall tax revenue is rather high, 34 percent of it are indirect taxes. Indirect taxes encompass stump duty, duty, VAT, customs duty, etc. It relates to the overall sum of indirect taxes collected by the Indian government. In many other developing nations, the proportion of indirect tax is greater than that of direct tax and in developed nations, however, the proportion of indirect taxes is much lower. As a result, the latest introduction of the Goods and Services Tax (GST) would enable the authorities to efficiently manage taxpayers. This will be in a position to build the whole tax system.
The Goods and Services Tax system substitutes a large number of indirect taxes and merges all of into one GST tax, this, in turn, has a helps business organizations all over the nation, especially the small and medium business organizations.
How Does GST Aid Small/Medium Business Organizations?
We all know how cumbersome the process of paying taxes or almost anything related to taxes can be, and due to the existence of various departments and being made to run in circles between those departments, in order to pay GST or anything related to GST, takes up a lot of time and energy and it simply is a waste of time. The more departments there are, the more you end up running between them.
Presently, the overall tax imposed by the state and federal governments is up to 32%, however, with the introduction of the GST, company owners are required to pay a slightly smaller tax of about 18-22%. In addition, they will not have to pay more than one tax and don’t have to pay any other department. It renders the job a lot easier for any company owner.
Here are a few ways how the implementation of GST will directly affect small and medium business organizations.
- Presently, VAT payment is compulsory for any company if the yearly turnover in certain states is 5 lakhs or more and in certain other states, it is 10 lakhs. That distinction causes confusion in multiple states. Under GST a company is not allowed to file or receive GST if the yearly turnover is 10 lakh. This applies to every single state. This would encourage several small companies with a turnover of between 5 lakh – 10 lakh to escape filing for a GST return.
- GST will assist and simplify the procedure of starting a company in India. Previously, each and every company in India was needed to acquire a VAT registration which varies from one country to another, and the laws and regulations are dissimilar. This was also a very frustrating process. Nevertheless, under GST, business owners are only required to register for GST, and it has a unified procedure quite similar to service tax.
- GST enables small and medium-sized companies to conduct business in India with convenience, owing to the less difficulty. The difference between both the goods and the services has disappeared, and compliance will be made much easier.
Benefits Of GST
Listed below are a few of the benefits of GST that a tax-paying citizen registered under GST can avail.
Reduction In Barriers Of Trade
One of the most energizing advantages of GST is the decreased trade obstructions between different states in India. Before GST, offering to clients in different states was troublesome, because of the muddled state, interstate, and national taxes included. To exacerbate the situation, each state had various different rules and regulations. For small and medium organizations, this additional weight was regularly difficult to hold up, given their restricted client base. Since GST disposes of all the multiple state taxes, it opens up entire India to your business. With GST, you can dispatch items anyplace in the nation and still pay a similar tax rate.
GST Filing Made Easier And Convenient
For entrepreneurs, perhaps the best thing about the GST is its comfort and convenience. In the old framework, your organization needed to pay and track an assortment of taxes, including administration tax, VAT, entertainment tax, luxury tax, and countervailing duty. With GST, you just need to make just one payment, making your month to month and yearly returns a lot simpler. That implies you can remain compliant with the law without having to get a professional to do it for you.