GST is the new buzzword in the market nowadays. From the day when it was introduced, it gained the attention in the market. The new tax is going to affect small and medium businesses in the market, and this is the reason that is bringing the new excitement among the entrepreneurs.
Even a small sized business contributes towards the economy of the country, especially a developing nation like India. The new tax system is going to affect some sectors in the country’s market both positively and negatively.
What is GST?
Goods Services and Tax is a tax that is applied to the different stages of a process such as distribution, transportation, manufacturing, etc. This tax combines various other taxes to make a single charge. This is done to make the tax system easier. The tax applies to the values involved in transactions activities such as commission, packaging, or any other expenses that incur during sales. GST will also allow full tax credit from the inputs and capital goods on procurement which can later be set off against the GST output liability.
Impact of the GST on Small Business in India
It is going to be in favor for the small business in the country in more than one ways. Below are some of the ways that will brush up your knowledge about this new taxation system.
- The centralized registration system will make initialization of a business venture simple in the future.
- The current tax system needs you to pay more VAT along with other taxes if your company has a turnover of more than 5 lac per year. The GST, in turn, is going to apply a much-reduced tax rate than these taxes for small businesses.
- The GST tax will forbid any entry tax for goods that are manufactured or sold in any part of the nation. This will result in the fast delivery of the goods.
- The GST tax also ensures zero ambiguity between the different products and services. This will further ease up the all the legal processes for a particular
The Bottom Line
The overall impact of it remains a matter of observation for the Indian economy. These are the best possible benefits the new tax is expected to bring about for small sized businesses. Apart from these, the new tax will involve lesser compliance for businesses and a defined treatment for e-commerce.