Planning to Start a Small Business? Find Out the Benefits of GST


If you’re planning to start your own business after the GST roll-out, you’re more likely to be the luckiest person. It is because after the implementation of GST, small businesses or medium enterprises are exempted from filing the GST. Instead they can get registered under the composition scheme of the GST in which the businesses have to pay quarterly tax at a nominal rate. Businesses are a booming sector and that’s the reason Government is implementing reforms and programs to create a reliable and successful platform for the growing market of India. GST is not only a unified indirect taxation system, but also a way to increase the growth and economy of our country. Although initially complying the tax reform might be daunting at first, in the long run it will benefit both businesses as well as the consumers. Let’s discuss the benefits that GST has to offer to the small businesses and medium enterprises.


1. Easier to Start a Business

Previously, the sales tax department used to have a list of turnover slabs which require VAT registrations in order to start a new business. Due to the complex taxation system, and different rules of different states, many people were unable to start a business. The complex provisions and fee structure burdens the businesses and indirectly affect their cash flow and prevents growth. However, after GST, there is a uniform procedure of starting a business such as similar and uniform tax structure in each State and easy mode of payment and fee structure.

2. Expanding Business is a Lot Easier

In the previous taxation system, small businesses or medium enterprises used to limit themselves to intra-state supplies of goods and services due to a lot of taxes involved in inter-stare supplies. Those taxes increase the cost of the products for the customers, thereby, reducing their customer base. However, under GST, the burden of taxes will be eliminated as the tax credit can be transferred irrespective of the location of the customer as well as the seller. This is how small businesses can expand across the borders.

3. Lesser Tax Burden

One of the major benefit of GST for small businesses is that there will be lesser tax burden. It is because GST will remove the cascading effect of taxes in all the States and Centers. Taxes that have been subsumed within the GST are entertainment tax, and luxury tax, VAT, entry tax, tax on betting and gambling. Center taxes that have been subsumed are Special Additional Duty, Central Excise Duty, Service tax, Additional Custom Duty, Additional Excise Duty, Service tax etc. Businesses are benefited as they are able to take the input tax credit. In this way, tax burden will be reduced which will make the goods cheaper for the end consumer and increase the profit margins for SME’s.

4. Entirely Online

Under the GST, entire process including registration, payment of taxes, filing and GST returns, refunds will be online via GST portal. The burden that small businesses used to face in which interaction with department officers was essential will be eliminated which will save their time as well as the efforts.

5. Transportation of Logistics Will be Faster

Another major benefit besides the GST exemption for small business is that GST will eliminate the time-consuming tax procedures across the borders during the inter-state supplies of goods and services. After GST, the tax burden of transportation of logistics and their delivery will be reduced to around twenty percent. No entry tax will be charged anywhere in India thereby promoting the small businesses with faster delivery of the goods.

Wrapping Up

Though GST has several benefits for SMEs, it has few drawbacks too. However, initially businesses might face the exportation issues related to supply of goods and services, but in the long run GST will prove to be one of the biggest successful step that our Government has taken in order to improve country’s growth and economy.

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