The Goods and Services Tax (GST) Bill was passed in May 2015 and rolled out in April 2016, modifying the indirect tax regime in India. GST is a value-added tax that is levied at different points in the supply chain. Tax credits are allowed on the inputs acquired for use in completing the supply. Therefore, the GST is borne by the end-users as they are the last entity in the chain.
GST has simplified indirect taxes by combining multiple taxes in a single category, which has also resulted in uniformity. Moreover, for small business owners, here are four benefits of GST registration.
- Combined filing of tax returns
Before the implementation of GST, small businesses had to separately file value-added tax (VAT) and service tax. GST registration for small businesses makes invoicing easier with a single applicable tax rate and allows them to file service tax and VAT in one go.
- Reduced transport and logistics costs
GST has resulted in lesser border checks, which reduces the transportation time. With easy transportation of goods between states, the logistics costs have also decreased. Thus, after GST registration, small businesses can mainly focus on improving operations and exploring new opportunities to expand their ventures. Small and medium enterprises (SMEs) may look for SME loan solutions to meet their working capital requirements.
- Simpler tax process
Registering for GST reduces the time and effort spent on tax compliances. GST combines multiple taxes, such as excise duty, VAT, and service tax under one regime, thereby simplifying the tax procedure and reducing the time taken. Additionally, GST reduces the compliance requirements for small businesses.
- Eliminate cascading taxes
Before the implementation of GST, goods and products were taxed under VAT while services were liable to service tax. Every state had different VAT rates, procedures, and regulations, making it quite complicated. Additional taxes like customs duty, luxury tax, central sales tax, and others were applicable as well. GST has eliminated all these taxes and removed the hassle of ‘tax on tax’. Small businesses can not only save tax but also avail of funds at affordable SME loan interest rates to grow their ventures.
Top financial institutions like Mahindra Finance offer business loans to SMEs at attractive interest rates. To know more about the features, documentation requirements, repayment tenure, amount, and SME loan eligibility criteria, visit the official website of Mahindra Finance right away.
As new ventures do not have to abide by different tax rules levied by the states, starting a new business is now easier than ever. Centralized registration simplifies the procedure and reduces costs. Small businesses may, therefore, reduce complex paperwork by choosing to register for GST.