GST Benefits for Small and Midsize Business
The amount of tax liability of small and medium size businesses can lead to the bankrupt of such businesses. The introduction of GST in India seeks to avert such problems and others that may arise due to the tax structure in the country.
With the introduction of Goods and services tax (GST), the final consumer bears the tax burden and not the supplier. In fact, small business with aggregate turnover of up to Rs.5 lakhs and Rs.10 Lakhs are exempted from paying tax. Apart from this, there are other benefits GST avail to small and midsize businesses.
GST Benefits for Small and Midsize Business
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It makes Business Start-up Easier
. Before the introduction of GST, is important to carry out VAT registration in the state where the business is carried out. For a business to carry out transactions in different states, the owner must understand and comply with the different tax structures for each state. The complexity of the procedure for starting a business in India can discourage any entrepreneur from putting his/her idea to bear. It is easier to start a business now as GST subsumes both the state and the central tax structures.
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It Simplifies Tax Filing
As GST integrates the different states tax system as well as the central tax, it brings about consistency in the tax structure. GST allows small business to know their tax liability and ensures smoother tax filing. This promotes prompt payment of tax and as a result reduces the chance of compiling tax liability. The use of electronic ledger makes invoicing simpler especially for small businesses that use small business accounting software.
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It Reduces Tax
Small and Midsize businesses enjoy reduced or no tax at all under GST. Businesses with low aggregate turnover can apply for exemption or become composition dealer. Although the concept of tax relief is not new, it is now expanded and uniform across states. Furthermore, businesses that deals with both goods and services, like restaurant businesses, do not need to pay for separate taxes for goods and services.
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Opportunity for Expansion
Midsize businesses that are not under the composition scheme enjoy input tax credit (ITC) and this invariably lowers their tax rate. Small and midsize businesses can now carry out inter-state supply and purchase without the cascading taxes and tax regulations of different state. This allows a manufacturing firm based in one state to have production plant in another state and pay the same tax.
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It allows Business Access to Loan
Access to capital can make or mar the growth of small businesses. Through GST, small businesses have thorough tax records to show their financial capability. These records can be presented to banks and other mending institutions to grant loan as a display of the credibility of the business and show the credit-worthiness of a small business.
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Speedy Transportation of Goods and Services
With the elimination of checkpoints and double taxation, the delivery of goods and services from one state to another is now faster. Small businesses that wish to expand to another state do not have to worry about logistics costs and time especially regarding tax. Speedier inter-state delivery of goods and services can go a long way in reducing the production cost and enhance the performance of small businesses.
Take advantage of the many benefits GST provide for small and midsize businesses to simultaneously reduce your tax liabilitoky and expand your business base.
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