The Government of India introduced the Goods and Service Tax or GST through legislation in March 2017. Almost every business owner and taxpaying citizen had varying perceptions about the working and effectiveness of GST. Before learning about the benefits of GST registration, you must have doubts regarding the necessity of GST.
The new tax was implemented in the Indian economy in July 2017, creating a new chapter in taxation rules. The primary objective behind introducing GST was the removal of different indirect taxes. Goods and Services Tax helped create a unified taxation system, which offers better ease of collection and enhances the efficiency of tax collection. However, the introduction of GST created confusion for business owners as it was an unfamiliar concept. Over the last five years, individuals and businesses have realized the importance of GST and its benefits.
Understanding the Goods and Services Tax
The best way to learn how GST registration can support the growth of your business would focus on understanding GST. It is a national indirect tax for goods and services, removing different indirect taxes. The Goods and Services Tax is a unified tax that replaces different central taxes such as service tax, central excise, special additional customs duty, surcharge and cesses on goods and service supply, and extra duties for excise and customs.
Another significant highlight among the benefits of GST registration is the flexibility of auto-populated returns on a monthly and annual basis. Furthermore, the GST registration and payment process relies largely on technology, thereby removing the necessity for human interaction. In a way, GST has opened up the doors to multiple opportunities for growth for various businesses in India. On top of it, GST has emerged as a major component in India’s economic growth. According to the 2020-21 Budget, GST accounted for almost 28% of the total revenue of the Government of India.
Impact of GST on the Growth of Businesses
Any business with a yearly turnover of 20 Lakhs INR to 40 Lakhs INR should register for GST. The turnover limit could vary for different states. However, it is important to note that GST registration would ensure compliance with taxation laws in India. The Registration for Goods and Services Tax ensures that you don’t have to pay legal penalties. How does GST help your business in achieving growth? You can find the answer in the notable benefits of GST registration and how they can help your business gain a competitive advantage. Here are the most promising ways to leverage GST to benefit your business.
- Easier and Flexible Taxation System
One of the foremost entries among the benefits of GST for businesses points to the assurance of a unified taxation system. As a result, taxpayers don’t have to worry about multiple taxes or complicated offline registration procedures. The new taxation system offers better transparency, thereby removing the need for explaining different elements such as CST, VAT, and excise to different departments. Most important of all, the unified taxation system removes the possibilities of corruption through the online and paperless tax filing process.
- Credibility for Businesses
The advantages of GST registration would also include the assurance of credibility for your business. Businesses with GST registration could showcase that they have official recognition from the government. In addition, GST registration also suggests that the concerned business follows transparent practices with desired standards of accountability. Anyone could verify the behavior of your business for legal compliance, thereby attracting new customers, business partners, and suppliers.
- Inter-state Business Operations
GST registration could support business expansion across different states. Prior to the Goods and Services Tax, most startups and new businesses preferred to restrict their operations within one state. It helped them avoid tax burdens in other states and the complicacies of adopting different approaches to conducting business. As a result, small businesses suffered the most when they wanted to expand their business. However, GST has removed the complexities of multiple taxes alongside allowing inter-state operations. You can explore new opportunities for the growth of your business in other markets as your customer base grows continuously.
- Lower Compliance Costs
Businesses can explore opportunities for growth with the benefits of GST registration in simplifying compliance processes. Rather than filing multiple indirect taxes, business owners can ensure tax compliance with regular GST returns. The streamlined compliance process not only saves time but also money and other valuable resources. Businesses can use the time, money, and human resources saved from the compliance process to boost their growth.
- Value of Input Tax Credits
Most of the critics of GST suggest that it is a high price to pay for removing indirect taxes. However, it is also important to learn about the impact of the input tax credits accumulated for GST paid on purchased goods. The input tax credits can help in offsetting the GST liability of a business on sales. Therefore, GST registration could help you avoid the cascading impact of taxes, thereby reducing the overall tax burden on businesses. Subsequently, you could ensure competitive pricing of your products and services that could attract more customers and grow your business.
- Accessibility of Government Contracts
Businesses with GST registration could gain eligibility for participation in government contracts and tenders. The benefits of GST registration can help your business unlock the opportunities for landing up with government contracts, which could contribute to business growth.
- Streamlining Your Supply Chain
Another advantage of GST registration is that it helps your business in streamlining supply chain operations. Suppliers working with GST-registered businesses must follow GST regulations, thereby promoting a transparent supply chain. As a result, your business can stay safe from non-compliant or unregistered vendors. On top of it, you could also avail input tax credits from suppliers with limited complications.
The importance of GST registration for business growth is visible in the different benefits of the Goods and Service Tax. It provides a unified approach to taxation alongside supporting the operations of businesses in different states. Furthermore, businesses with GST registration are more likely to earn the trust of customers with ease. In addition, GST registration also helps in saving costs of compliance alongside reducing the administrative burden of taxation. Find more information about the GST registration process and tap into the benefits of GST right now.