GST – Goods and Service Tax
GST is definitely a great step for Indian economy and startups. It’s implementation will bring in a lot of funds to government kitty as all the transactions will be on paper and every entry via cheque will have implication of Goods and Service Tax directly.
GST also has a reverse calculation mechanism which will ensure all cheque transactions will also have reverse calculation mechanism where no transaction will be hidden. This will allow government to calculate proper taxes on income generated.
Further, this is a golden opportunity for startups as the mechanism will make the balance sheet strong and venture capitalists will be interested to invest in startups.
It is all about accepting the change positively and we are sure there will be great outcomes of GST
Here’s the top 3 benefits of the Goods and Service Tax for Startups:
1. One Taxation System for India –
With GST, taxation system has been simplified. Previously, VAT, Service Tax and Excise all 3 or at least first 2 were applied which now has reduced to a single tax.
This will reduce lot of paperwork and this will largely benefit the startups.
2. One Registration –
Making India a common platform, GST needs one registration and companies can do business in any part of India. Earlier startups had to register again and again for different taxes or different states.
3. Startups Eligible For Higher Threshold Limit
Earlier the threshold limit of service tax was 10 lakhs while the threshold limit of VAT varied from 5 lakhs to 20 lakhs in different states. Startups are now eligible for higher threshold limit of 20 lakhs (10 lakhs in case of North East states). Not only this, startups whose annual turnover is less than 50 lakhs can opt for composition levy at a lower rate.
Overall, GST is a structured tax system which will be more transparent and beneficial for Indian Economy