How Do The New GST Rules Impact Businesses In India?

In the present scenario, the total tax collection of India counts to about Rs. 14.5 Lakh Crore. 34% of this account for indirect tax, and with the implementation of Goods and Services Tax (GST), the Government of India can have a better grip on taxpayers further. This taxation scheme was launched to unify a number of indirect taxes under a single tax structure.

The GST registration in India is made simple for all businesses, considering its importance on the economy.

After knowing what is GST, you must check out how it affects various trades.

Impact of GST on Different Businesses

Small Enterprise

Implementation of GST suggests a hassle-free filing of tax. Previously, with numerous taxes, the damage on the revenue of a manufacturer was 32%. However, the implementation of GST has reduced this tax rate to 18-22%.

Start-ups

Entrepreneurs can start a business without worrying about VAT registration. Earlier, companies needed to pay VAT in case the revenue of the trade exceeded Rs. 5 Lakh. However, GST increased this limit to Rs. 10 Lakh. Moreover, the entire process of tax computing became easy with this new taxation scheme.

Manufacturers, Distributors and Retailers

GST mainly boosts competitiveness in the manufacturing sector of the country. The previous array of taxes contributed to increasing the administration cost for distributors, retailers, and manufacturers.

Now, costs have lowered with a single tax, and hence, investments can be made in improvising this particular sector.

Nevertheless, apart from the GST benefits, there are many disadvantages that it brings to each trade. Some experts maintain that there is no significant cost reduction. On the contrary, some of the costs shot up. This can create an adverse impact on the working capital of businesses.

Well, in that case, companies often opt for business loans offered by leading financial institutions to cover various expenses effortlessly. Moreover, lending institutions also offer online GST calculator for companies to calculate their tax easily.

Now, that you know about the impact of this unified consolidated tax, look into the required eligibility criteria for registration:

If your business has an annual turnover of above Rs. 20 Lakh.

In case you participate in inter-state transactions.

If your business is located in Jammu and Kashmir, Assam, Himachal Pradesh, etc., the annual turnover requirement is Rs. 10 Lakh and above.

In case you own e-commerce business.

If you pay taxes under Section 9, sub-section (5).

Once you are eligible as per the above-mentioned criteria, you must check the guide to GST registration process in India Below is a brief detailing about it:

The Registration Process for GST

Fill out GST REG-01 form with the necessary information like email ID, PAN, and mobile number. This will be followed by your PAN verification.

Next, you need to verify email ID and mobile number with a one-time password.

Application reference number or ARN (that you receive on the registered mobile number and email ID after the verification) needs to be stored.

You can put in the ARN number and then attach required supporting documents.

You should fill out the automatically generated GST REG-03 form in case you require additional information.

A certificate of registration for GST is issued within 3 working days after verification of submitted information.

Based on the type of trade, GST affects each of them differently. For example: GST on goods and services fall under a proposed 4-tier tax structure. The GST rate varies from 5%, 12%, and 18% to 28%.

With the implementation of GST, there have been both positive and negative impacts on different businesses. Since it is mandatory now, entrepreneurs can always count on loans to cover the incurred expenses easily. So, undergo the easy GST registration process and allow your company to avail the exclusive benefits of this tax scheme.