Tax is one of the major parts of our lives. Especially if you are into business then it is necessary for you to pay various taxes. But this was the story of 2016. In 2017 from the month of July we have seen reforms in the taxation system in India.
The goods and services tax also known as GST had been introduced in our lives. There is completely no doubt in the fact that there are various negatives and positives to the same just like any other taxation system. Also it has impacted various industries differently.
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Apart from that one can will assume that the GST has managed to affect various
Levels of business are differently as well. One of the major concerns for the people is that how has it impacted the small and medium business enterprises in India! And this should be a concern considering the fact that small and medium businesses make up till about 45% of Indian economy.
But before we understand that how has GST impacted them, we must understand that what GST stands for in the first place.
So what is GST?
GST also known as the goods and services tax is one whole single tax applicable for all the indirect taxes we were paying. Let us make it much simpler for you in understanding. When it comes to business then initially we had to pay VAT as well as sales tax.
Different states have different rules and regulations for the same. With GST we have managed to bring all our indirect taxes into one single tax. This tax is levied by the central government of India.And it’s definitely ensures that all the indirect taxes such as the sales entry tax, VAT and Service charges are brought under one single category.
This has actually helped the small and medium enterprises a lot.
We will let you understand that what are the best advantages of GST on the small and medium enterprises in India.
The advantages of GST on Small and Medium Businesses
Following are the various advantages that the SME sector in India has experienced:
The Reduction in the Logistic Costs
As already mentioned in different states have different laws and rules with taxes. The scenario of the Logistic costs was no different. There is completely no doubt in the fact that in different States we had to come up with different toll taxes as well as transport charges.
This multiple tax system definitely was a costly affair that the small and medium enterprises could not stand easily. With the help of GST everything has been brought under one single tax system demolishing all the evils of the multiple tax system.
This is definitely one of the major reasons why you can get through with the best advantage with GST if you are a small or medium Enterprise.
Exploring Markets all over the Country:
This is another of the most essential reasons why you must ensure that GST has really proved to be fruitful. The problem with small and medium enterprises initially was the fact that they could not actually sell their products in different states because of the fact that the CST that they use to pay would have cost the end products too much. As a result no consumers would want to buy them.
GST has managed to abolish this particular system overall. And this is in fact made accessing two different markets in all over the country easy for these businesses. It is one of the major reasons why people must make sure that they realise how efficient GST has made small businesses for them.
Making Launches Easy
Initially people would have to think at 10 thousand times if they were to launch a business of their own. After all there was so many different formalities to fulfil in the first place. People would have to apply for VAT and then for the sales tax and so many different taxes all together.
Waiting for them to be approved for months on an end was also a major problem that needs to be addressed. Fortunately with GST this is one of the problems that has been easily got rid of. Nothing can be better than getting to start a business with utter ease. Nevertheless extending business had also not been this easy.
The Relaxation on Tax
Before the GST had been implemented, the businesses who would earn 5 lacs as turnover year would have to pay enormous amount of indirect taxes. And these were at various stages. These taxes of an made it difficult to make enormous amount of profit in the first place.
With the help of the GST now the amount has been increased to 20 lakh Rupees as turn over. Apart from that people do not have to pay the taxes in various stages. Neither do they have to worry about paying different taxes in the first place.
Less Number of Obstacles:
Only because all the indirect taxes are brought under one particular tax, it is quite evident that the number of obstacles on the same has also reduced. Initially there were so many different obstacles as well as so many different interferences from people all over the government.
With the introduction of GST this is something the people do not have to worry about anymore.
These are some of the major advantages that the small and medium enterprises in India have got with the help of GST.
The Necessary Evil:
Just like any other thing in the world one can easily relate to the fact that, GST also needs to have its own necessary evil. Earlier people who would on more than 1.5 crore as turnover would be provided with the tax exempt.
But now this has reduced a lot. Nowadays people who earn 20 lacs and less will only be considered for the same. But comparing this particular disadvantage to the various advantages that GST has offered one can definitely assure that the results will be finally in the favour of the small and medium enterprises in India.