GST; The Good ,The Bad And The Unsure, A Startup Perspective!

Tomorrow is a historical day. At the strike of midnight today, GST  takes. The much debated tax law, which can make or break the nation’s economy is finally here. So, what effect does Goods and Services Tax have on startups in India? Lets find out…

Breath Of Ease For Small Businesses…

Currently , any business with an annual turnover of over Rs.5 Lakh had to get registered and pay up the VAT. Thus tax varied from state to state. Problem for startups was that during the initial years, they usually have a low turnover. So the decision to increase this limit is a welcome change. Now under GST, if a company has over Rs.20 Lakh of annual turnover, only then the taxes have to be paid. And those too are the same in all the states. So, for small businesses its a sigh of relief, and a welcome change towards making India Startup ready.

GST
GST makes business easy

Simple Procedures…

One of the worst things about getting businesses registered and filing for returns  was going through the hassle of running to the offices and getting in line…you know, the typical government office scenario. GST changes it all by allowing all the require procedures to be done online. Startups do not have to run around to tax offices to get various registrations under Excise, VAT, Service tax.

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Understandable Tax Laws…

With so much to do with very less time, startup founders usually found it difficult and annoying to keep a track of all the various taxes imposed, and staying abreast of changes in them. Startups often work on tight budget and cannot devote resources to look after the various tax compliances under Excise, VAT, CST, Service Tax etc. After GST all this will change. With just one single tax to focus on, atleast this problem would be solved for startups.

E-Commerce Rejoice…

A lot of startups are into E-commerce these days. In the current framework, transportation of goods and warehousing were both difficult tasks. Both are immensely important to E-commerce companies. Thankfully to the GST, these problems would be solved. Other than that, any company distributing only digital material would alos be benefited by the GST. To learn more about it click here.   GST will unite India removing restrictions on inter-state movement of goods.So, this makes it easier for E-commerce companies to set up warehouses in strategic locations, as per requirement. With reduced hassle and intervention from authorities, smooth functioning would be easier.

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Sadly For Manufacturing Though…

Alas, GST brings sad news for the manufacturing industry though. Current frameworks dictates that only those manufacturing businesses have to pay excise that have an annual turnover over Rs.1.5 Crores. Bust, as mentioned above, the threshold has been lowered to Rs. 20 Lakh turnover per annum. Though this rule made things easier for the most small businesses, its a huge blow to  those which are well into manufacturing sector. Hence, GST will increase tax burdens on such companies.

The Wait Is Finally Over…

This is one of the biggest rulings of our times, and will surely go down in the history books. Obviously, it’ll be a huge step forward for startups all over the country, the real implications of GST still will soon be realized by the whole nation. With great savings in logistics and taxation, GST is one of the biggest moves forward to make India startup ready!

 

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