The government of India adopted GST, the goods and services tax, on July 1, 2017, to bring all taxes under one umbrella.
GST, India’s single tax on goods and services, maybe one of the most far-reaching economic changes in the country’s history. Previously, customers had to pay a variety of taxes on commodities that were used to deliver the services they valued. However, under the current law, the government has combined all of these levies into a single tax known as gst, or goods and services tax.
While this change aided in the simplification of the previous taxes procedure, many individuals appear to be unaware of what it is.
What is GST?
GST is an indirect tax levied on the cost of goods and services. It raises the overall cost of a company’s products/services. When a client makes a purchase, the GST is collected and transferred to the government.
The GST system is made up of three major components:
The central goods and services tax (CGST)
The state goods and services tax (SGST)
The integrated goods and services tax (IGST)
Previously, companies had to go through the registration and taxing processes for a variety of taxes such as customs duty, excise duty, service tax, entry tax, and so on. All of this is now rolled into a single tax, GST.
- GST regulations in India for startups
With the new tax system in place, it is time to determine if GST would benefit startups or not. Here are certain GST laws for Indian entrepreneurs. Let’s get this started!
- Registration requires a higher limit.
Businesses with a turnover of more than Rs. 5 lakhs were obliged to register under the vat framework. However, GST has simplified the procedure by lifting the ceiling to Rs. 20 lakhs in turnover. This is fantastic news for small businesses, particularly startups.
- GST registration and filing online
The whole registration, filing, and payment of GST returns and GST billing are done online. As a result, companies are no longer need to visit tax offices to register for numerous taxes. The time spent on paperwork can now be saved owing to GST.
- This is a fantastic move for e-commerce and online startups.
GST is a benefit for firms that sell products and services through online marketplaces. They will no longer be needed to register for different vat regulations when transporting products over state lines. All of this would be subject to a single, uniform tax, GST.
- Manufacturing startups face a tax burden.
Previously, manufacturing firms having a turnover of more than Rs. 1.50 crore were only needed to pay excise tax. The turnover limitation has now been decreased to Rs. 20 lakhs as a result of the adoption of GST. This is bad news for manufacturers who are just getting started.
- Startups in the service industry will be eligible for a tax credit.
The adoption of GST has brought relief to entrepreneurs in the service industry. Customers in the service business are subject to a service tax. They can incorporate the vat paid (on their purchases) with the service tax charged to their consumers on sales under GST.