GST is an initiative by the Government towards the reduction in the number of taxes. It has been receiving quite a positive response so far. Small business owners have had major positive impacts on their businesses.
If you have joined the MSME (Micro, Small and Medium Enterprises) ecosystem recently or have been operating in this sector in the last one year, then the term GST (Goods and Services Tax) shall not be new for you. Below is a quick glance as to what this tax is all about and how it is going to impact you, as a small business owner –
The Goods and Services Tax was introduced by the Central Government last year. It is a form of indirect tax that focuses on removing any and all kinds of tax barriers between the states of India. This taxation scheme aims at creating one single tax umbrella for the entire nation. The GST is based on consumption tax wherein the taxable transaction is supplied to the existing taxable event of manufacture, provision of service or sale of any good.
Who is liable to pay the GST?
If you fall under the following categories of tax payers, you are liable to pay the Goods and Services Tax:
- Service Taxpayer
- Central Excise tax payer
- VAT or Sales Tax payer
- Entertainment Tax payer
- Luxury Tax payer
How is it going to impact your small business?
The Goods and Services tax is going to affect you, as a small business owner in the following ways –
Impact #1: Easy process of starting your business
All thanks to this tax, all small businesses can now rejoice! As per old rules, when you had to start a small scale business, you would have to have a VAT registration that is issued by the state sales tax department. Since every state has its procedures, the form and procedure vary as well. But now, with the introduction of GST, there is uniformity in the process. GST has introduced centralised forms and procedures of starting the business.
Impact #2: Reduction in logistical costs
If you have ever gone on a road trip from one state to another, you must be familiar with the number of toll taxes that come up at each highway. Same happens when small-scale businesses import and export goods from one state to another. There was a lot of time, effort and money spent on these cross-border toll taxes. Now, with the introduction of GST, all of this will be eliminated. Interstate movement will now become a lot cheaper as the majority of toll taxes have been removed.
Impact #3: Simple tax processes
This is the best impact GST could have on small business. With high business volumes, it becomes a daunting task to manage so many varied types of taxes. Not anymore with GST. With this new tax, a lot of taxes are being amalgamated as one Goods and Services Tax. GST will integrate all the main taxes across states thus making the tax paying process straightforward and easy.
Above highlighted are the three major impacts that GST has on small businesses in India.
Keywords: Goods and Service Tax, small businesses, small scale business owners