GST and Small and Medium Enterprises (SMEs)
1st of July, 2017 marked a beginning of a new revolution with the start of GST, or Goods and Services Tax in India. Since its introduction, there have been many debates on whether GST will be helpful or not, but GST brings along with it some benefits for Small and Medium Enterprises (SMEs).
Competing in an open market with big, well-known businesses will always be a challenge faced by SMEs and Startups. With GST, SMEs and Startups can breathe easy as, before GST, a business operating in multiple locations required a Value Added Tax (VAT) for each state along with a variety of State and Local Level Permits. GST does away with these hassles. GST specifically requires Centralized Registrations and provides the opportunity of doing this all online. This has reduced barriers for SMEs and Startups.
GST specifically requires Centralized Registrations and provides the opportunity of doing this all online. This has lessened barriers for SMEs and Startups.
GST seeks to combine all levels of Taxes (state and central) into one and under GST, companies will not have to deal with the hassle of excise duties, VAT, CST, service tax, etc. This will also lower the Compliance Cost for SMEs and Startups, leaving them with more room to breathe in a limited budget.
An added advantage for SMEs and Startups is the leverage they get to pay taxes, earlier even those who made a turnover of Rs. 5 lacs had to pay VAT. With GST, now companies will only be under the Tax bracket if they make a turnover of Rs. 20 lacs or more. However, if a business supplies goods and services on an interstate basis, they will be subject to GST regardless of their annual turnover. Also, there is composite scheme available for those who wish to choose it.
The introduction of GST is proving to be an advantage for SMEs and Startups. It gives the benefit of simplicity with reduced compliance.
Only time will tell how helpful GST is for all. For now, let’s hope for the best and consider the positives GST is introducing in the economy.
Managing the business on your fingertips was never so easy!