Next one week GST will be ruling the trends on news, views, and analysis. A noise similar to the one that was heard during the days of demonetization can be felt once again with a positive tone, as the nation approaches the morning of “ONE TAX”. All kinds of adjectives from biggest to greatest and revolutionary to ambitious have been used by all great men to hail the arrival of this tax but still, nobody can clearly decide and tell that whether it’ll be helpful or harmful. With a positive mindset, we can hope for a bag of surprises, filled with great opportunities as well as some hardships. Every business is curious and at the same time confused. As we all know that startups are the blooming plants of the modern day Indian economy. Their positive impact on the economic growth of the country makes it important for all of us to understand the impact that GST can cause on startups. So, let’s see how this GST rain facilitates their growth:
(a) Limits for registration under GST
We all know that the limits for registrations have now been increased to the turnover of Rs. 20 lacs, giving a positive push to small startups. In addition to this, the composition scheme that provides for payment of tax with a flat rate is also a big relief if the turnover is not more than Rs. 75 lacs.
(b) Slow movement and production
During the initial stages of rollout, because of the confusion among suppliers and due to the transitional provisions, there will be a slower movement of goods, that’ll lead to sloth paced production causing a delay in the supplies. This will affect the entire chain of activities that may lead to lower profits and bigger problems for small business houses in the initial days.
(c) Simple compliances
Now all the new startups will have to look up to GST. This will reduce their burden as before one tax regime, they were forced to have a knowledge of a number of tax laws before they thought of starting a business. GST facilitates simple and swift compliances as per “EASE OF DOING BUSINESS” mantra of the Government.
(d) More IT under GST = More startups
A huge number of jobs will be created with the coming up of GST in the service sector itself. The startups that are mainly featured with providing IT based services can work as agencies to facilitate the swift implementation of GST with their IT based services. This will have a long-term positive impact on their profitability as well as growth.
(e) Lower taxes leading to lower overall cost
As all the taxes are now replaced with a single tax, in the long run, the prices of goods will come down. There will be a more stable and uniform situation within the markets that will facilitate the growth of new business startups and also help the small business houses to flourish.
(f) More transparent and online systems
GST establishes online systems and promotes digital India. This leads to more transparent tax systems, timely processing of refunds and a simple way to operate for new startups as they can themselves keep a watch on their tax issues with the help of technology and online systems provided by the Government.
It’ll be too early to count the chickens before they hatch. We have to wait and watch, how this tax turns around the face of the Indian economy with a positive glow. There can be unrest and anxiety in the initial phase, however, once the dust is settled and the one time cost is recovered, the transitional provisions are over and there is a stable state in the economy, we can expect the prices to go down. This will help the small business houses as well as the startups to grow their business in the long run. We all should be positive and wish for a friendly start of the new era under GST. All the best!