GST-HOW START UPS ARE BENEFITED

GST: WHAT IT MEANS

Goods and Services Tax (GST) has now become a household term and everyone everywhere seems to be concerned with the latest news and press releases and developments, irrespective of whether they are direct stakeholders or not. Producers, Service providers, consumers, officials, and every member of the public hold a stake in the implications that GST has on our economy in one way or the other; but businesses have placed the greatest bet on GST – whether they now need to transform their mechanisms into the new compliance model or whether a new business is to be set up amidst the dynamic market condition prevalent now. We bring to you here a brief overview of why it would be beneficial to kick-start a business in the current scenario.

  • Simpler Procedures: Since the idea is “One Nation, One Tax, One Market”, inter-State movement of goods and services will become less burdensome as the multi-point taxation will be done away with. It will reduce the procedural formalities therein, and simplify the compliance requirements needed to keep in mind.
  • Raised Slab: Businesses can save a considerable amount of expenses under various heads since the slab under CGST Regime has been placed at Rs.20 Lakhs (Rs.10 Lakhs for Scheduled States) instead of the lower slabs under the VAT Regime; giving a wider window for businesses to stay exempted from liability.
  • Cost Reductions: A unified taxation system would do away with the individual tax-barriers placed by States, and bring down the cost of logistics and distribution chains. You can divest these savings into your business to achieve better productivity and efficiency instead.
  • Wider Reach: Removal of multiple tax barriers imply that businesses can easily expand and enter new markets across their own State borders without incurring great expenses or going to complex formalities. Your Start-Up gets to enter more markets simultaneously and reach a wider group of consumers, giving you an advantage that was not previously available.
  • Input Tax Credits: Businesses can avail the benefit of input tax credit system under the GST Regime[i], whereby credit of all three (IGST, CGST and SGST) can be used for discharging IGST liability. But only credit of IGST & CGST can be taken in CGST Act and that of IGST & SGST can be taken under SGST Act. Input Tax means the {IGST and CGST} in respect of CGST Act and {IGST and SGST} in respect of SGST Act, charged on any supply of goods and/or services to him which are used, or are intended to be used, in the course or furtherance of his business[ii].

 

The Registration and procedures under the new GST regime is facilitated further by detailed informative content released by the Govt through the portals of the Ministry and the CBEC. If you are looking to have a start-up of your own, now the time seems to be good enough to enter the market and exploit the advantages introduced by the new unified taxation regime.

You might as well consider GST a beginner’s luck!

INDIAN KANOON

[i] S. 2 (1) (d) of the IGST and  S. 2 (57) of the MGL

[ii] FAQs on GST, published by the CBEC, in p. 91 available at http://www.cbec.gov.in/resources//htdocs-cbec/deptt_offcr/faq-on-gst.pdf

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Categories: law

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