With the GST implemented in the country for the past few months, many businesses have started seeing benefits from the change. And if you own a business but is not currently required to register with the GST, then a knowledge of how the GST system changed the taxation policies and helped simplify the process can be of great help to you. As such, below we look at five changes that GST has brought in to the taxation system of the country.
Higher Registration Threshold
While in the earlier taxation regime, every business that generated an annual revenue of INR 5 lakh had to pay taxes, the GST implementation has relaxed the threshold. Now, only when your business revenues exceed INR 20 lakh per annum will you be liable to pay the GST on the turnover. As such, small businessmen gain big benefits under GST.
Avoids Tax Cascading
The biggest benefit for businesses is that the GST system completely removes the cascading tax effect of the previous taxation policies. For example, suppose that in the previous system, a business offers services worth Rs 100,000. They may be required to pay 18 % tax on it, which comes to Rs 18,000. But the service already includes usage of items that they purchased for Rs 20,000 and for which they paid 18% tax, which comes to Rs 3,600. But the business was unable to deduct Rs 3,600 from the Rs 18,000 tax they had paid for. Now with the current GST rules in effect, the business does not have to pay the dual taxes of Rs 18,000 and Rs 3,600. Instead, the business can deduct Rs 3,600 from Rs 18,000 and will only have to pay Rs 14,400 as a result. As such, you will save a lot of money in taxes in the GST regime when compared to the previous taxation policies.
Efficient Logistics Management
With GST, all the states will be implementing a single taxation system. As such, the logistics management will become much simpler for many companies. Earlier, due to the various taxes of the states, many businesses had to operate multiple warehouses to reduce the tax burden. But now since only a single tax has to be paid, there is no reason for multiple warehouses, thereby making the storage and transportation process simpler.
Under GST, businesses have fewer tax compliances to adhere to. In the previous taxation regime, a business had to file numerous tax reruns for VAT, service tax, excise, and so on.
The entire GST process has been fully digitized. As such, whether you are looking to take a registration for your new business, or are looking to file returns, or paying the tax, you can do everything easily through the internet. Hence, you don’t have to waste time running around various departments trying to file your business returns.
And if you are thinking of approaching quickcompany Company Registration for getting your business registered, be sure to get more info about how the GST will affect your business and when you should consider registering for it.