Common Startup Compliance Mistakes & How to Avoid Them
GST or Goods and Services Tax was hailed as India’s progress towards a One Nation One Tax system that would make the assessment and collection of taxes fair, equitable and convenient for all. The GST mechanism has moved from manual to online from the point of registration to the filing of returns. The new tax regime has seen a paradigm shift in the way indirect taxes are collected and assessed in the country and the revenues are improving with every passing month. How has the rollout impacted small businesses and startups? Do they stand to gain from this rejig? Read on to understand the GST advantages for startups and small businesses. Since it is a destination-based tax that adds value at each step, the final customer bears the GST after taking credits for input taxes at the previous stage. This has led to the overhaul of the multiple Central and State taxes that have been rolled into a single GST. Improves the Ease of doing business in India - Setting up and running a new enterprise in India has become relatively easy due to the implementation of the Goods and Services Tax Act. There is a centralised online system for GST registration and a single registration will allow the business to trade across states without any other formality. This has raised India on the ease of doing business index by several notches from 142 in 2014 to 63 in 2022. The Convenience of a Single Tax - The GST Act has ensured that multiple central and state taxes are subsumed into a single tax.
Exemption for Small Businesses and Startups - GST registration is not mandatory for those with a turnover less than INR 40,00,000(INR 20,00,000 in special category states) This saves small enterprises from the complexities of GST compliance and the associated formalities. Simplified Processes - In the earlier tax regime, businesses which supplied goods and provided services as well like the hospitality industry, computer dealers etc had to comply with Value Added Tax as well as Service Tax guidelines. There were multiple rates involved for different states as well as products. With GST, invoicing and compliance have become much simpler. Elimination of the Logistics Nightmare - Since goods can be sold anywhere across the country, the need for maintaining warehouses at multiple points for the purpose of reducing taxes is eliminated. This has streamlined the supply chain function. Businesses can save a lot of money in storage and transportation costs due to GST and this is one of the direct benefits of having a single tax system. Great help for E-commerce setups - The implementation of GST has helped online businesses that supply across the country to flourish as they can comply with the tax rules easily. In the absence of GST, this would be a messy affair as it would involve inter-state movements subject to different tax regulations. The implementation of GST has led to a more efficient and centralised manner of revenue collection with both the organised and unorganised sectors being brought under the fold. The online registration of businesses for GST and the digital filing of returns has made the process incredibly smooth. Startup Movers offers professional services to startups and new businesses to help them meet their accounting, tax and legal compliances in a timely manner. Instead of allocating dedicated resources for the purpose, businesses can outsource these activities to be remotely handled by experienced professionals providing great value. To know more you can call on 7011808002 or visit https://www.startup-movers.com/
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