GST, or Goods and Service Tax, got introduced back in 2017 to bring the citizens of India into a unified taxation system. Apart from enhanced operations, small and medium scale businesses that have opted for GST registration also benefit from the simplified taxation procedure. This regime subsumes all the indirect taxes like VAT, excise tax, service tax, etc., and brings centralized registration.
Also, online access has been equally beneficial for start-up owners, allowing them to file their tax returns every quarter easily. However, before going forward, individuals should know how GST registration can help them in the long run.
Advantages of GST registration
The implementation of GST has been useful for both the Government and the citizens of India, reforming the country’s economy. For businesses exceeding a specific turnover, GST registration is mandatory. This not only helps in lowering the tax burden for them but also makes it easier to obtain business loans to grow their firm. To delve deeper into all of its benefits, here are some pointers you should go through:
- Uniformity in taxation
The primary purpose of introducing this destination-based tax was to simplify the process by abolishing multiple taxations and economic barriers. Unification of State and Central indirect taxes into a particular tax type has also given shape to the Central Government’s ‘Make in India’ initiative. Since the goods and service tax has widened its coverage for product supply, the economy will witness substantial revenue with the increased collection of taxes.
- Composition scheme
Having registered with GST helps small businesses to get relief from tax burdens through Composition Schemes as well. Under this scheme, you get the benefit of lower taxes in case your business turnover is between Rs.1 crore and Rs.1.5 crore.
- Simpler compliance
Under the previous tax regime, taxpayers were required to pay both the service tax and VAT, which had their own set of returns and compliances. With the arrival of GST, the hassle of multiple tax payments has been reduced, including the time individuals spend on tax compliances. Along with that, one of the key advantages will be the drop in compliance costs.
When it comes to GST returns, four out of 11 returns are applicable to all taxable entities under this destination-oriented tax. Therefore, entrepreneurs should be aware of such information to apply for a business loan as well as the required documents related to GST returns.
- No more cascading of taxes
Small businesses are able to make additional savings with the implementation of goods and service tax. Now, all types of indirect taxes are divided into two categories, such as state taxes and central taxes. And with that, the concept of ‘tax on tax’ has been completely abolished, enabling business owners to save more. There are some other tax-saving tips for small business owners as well which include filing tax returns properly, recording expenses, etc.
Once the taxes are properly filed, availing of financing options like business loans becomes much easier.
In this regard, business owners must take note of pre-approved offers extended by financial institutions like Bajaj Finserv. These offers are available on several unsecured credit facilities like business loans, personal loans, credit cards, etc. Individuals can check their pre-approved offer by simply submitting their name and contact number.
- Reduction in logistics
The impact of this taxation system has been significant with simpler calculation, more funds for production, increased volume of exports due to reduction in customs duty, etc. After opting for GST registration, businesses also benefit from the reduced transportation time and lower logistics costs.
- Easy way to start a business
For new SMEs, a great advantage of GST registration is that they are not required to meet separate tax rules in different states while handling business operations across borders. Even while obtaining funds to help your business raise finance, you do not have to go through complicated paperwork with this simplified taxation process.
Furthermore, the transparency in the system has also been beneficial for business owners to avail credit facilities easily. Lenders can simply make use of a borrower’s 15-digit Goods and Services Tax identification number to obtain information related to the business, helping them to enjoy prompt loan approval.