In an attempt to remove the economic barriers and pave the way for an integrated one at the national level, Goods and Services Tax or GST came into effect. Prior to the introduction of this tax, the cascading impact of multiple taxes across the supply chain often resulted in an elevated cost of a product. This complex and inefficient taxation regime resulted in an increased tax burden on goods of approximately 25-30%.
Following this escalated prices of goods and absence of transparency across the taxation system, a movement towards this unified taxation regime was articulated by the then Central Government.
GST for businesses in India
Following removal of a winding tax assessment framework, this ‘one nation, one tax’ regime has brought in multiple ways in which GST impacts one’s business. While the tax enters its 3rd year of implementation, several improvements are being introduced. It includes amendments and clarifications that are targeted to reduce the sector-specific financial hardships. It brings in several advantages for the business sectors –
- Ease of starting a business
The removal of the cascading impact of taxes standardized and centralizes the registration system of businesses under this taxation regime, which simplifies the establishing of a new business in India. Subsequently, this taxation regime is predicted to improve India’s ranking in Ease of Doing Business Index. Considering the immense number of benefits of this taxation system, GST registration procedure in India has been kept relatively simple.
All that you need to do is
- Visit the tax’s official portal.
- Fill in an online application form by providing a few essential details.
- Receive an OTP on your registered contact number and mail ID.
- Get Temporary Reference Number (TRN) and use it along with entering the provided captcha.
- GST REG-01 is completed and followed by part B of this form.
Post completion of the registration process and confirmation of the same, applicants are provided with a GST identification number. This 15 digit number is essential to file for tax returns or claim refunds.
- Higher basic threshold limit
Before this taxation regime, any business with a turnover of more than Rs. 5 Lakh was liable for VAT payments. However, following the introduction of Goods and Services Tax, this threshold limit has been extended to Rs. 40 Lakh for suppliers of goods and Rs. 20 Lakh for the north-eastern and hilly states.
Considering this relaxation in the slabs, multiple start-up and small companies will be exempted from tax payment. The amount so saved can be used to improvise the other aspects of a business.
- Composition scheme for small taxpayers
In an attempt to simplify the compliances and reduce the cost of the same in cases of small taxpayers, Composition scheme was launched. What SMEs need to know about GST is that under this scheme, small taxpayers can pay a flat percentage of turnovers at every quarter. Entrepreneurs with a taxable business turnover of up to Rs. 1.5 Lakh (Rs. 75 lakh in case of north-eastern states) are liable to apply for this scheme.
Thus, entrepreneurs can now start on with their business endeavors with the benefit of a single indirect tax. While this lowers the production cost of services and helps them save on their working capital, financing for the same has been made convenient via business advances from leading lenders.
These funding options come with a hefty credit amount that can be used to invest in expanding operations, upgrade the latest machinery, improve infrastructure, restock inventory, or maintain the positive flow of cash.
In such cases, approaching reputed NBFCs like Bajaj Finserv and availing their Business Loan by providing one’s GSTIN ensures that borrowers can enjoy a host of its lucrative features, viz. –
- Hassle-free approval process
- Minimal documentation
- Zero collateral
- Convenient online account access
- Easy-to-meet eligibility criteria
Thus, while goods and services tax (GST) ensures a comprehensive tax regime and helps in the convenient payment of taxes, it eliminates the cascading effect of the same. It leads to reduced cost of production, which is exceptionally crucial for small businesses. Such trades with the registration for this tax has the additional benefit of enjoying a wavering of late fees on the GSTR-1 and GSTR-3B returns too.