The roll out of the much awaited Gst Bill recently brought out a new wave of collective initiative recently. The GST bill, being historic in its own sense, will provide a much awaited ease of small Business in the Indian market.
The prevalent indirect tax structure in India causes a lot of problems to all businesses especially the smaller ones (since they have less funds to hire experts for taxes) due to the multiplicity of the taxes and costs involved. With the intro of GST, the indirect Tax Regime will be minimised. The total tax levied by both the centre and the state together amount to 32%. With GST, it’s going to be around 18-22%, with the added advantage of less paperwork due to a simplified tax, which will encourage more firms to come under the tax regime.
Furthermore, tax administration and compliance will be simplified. The current tax regime is very pressurising for Small business. Dealing with tax inspectors would decrease since the system will be computerised which promotes the policy of ‘self-policing’.
Goods and Services Tax would be levied and collected at every stage of sale or purchase of goods or services based on the input tax credit method. This method allows GST-registered businesses to claim tax credit based on the value of GST they paid on purchase of goods or services as part of their normal commercial activity. Taxable goods and services are not distinguished from one another and are taxed at a single rate in a supply chain. GST will replace service tax and sales tax. But Income Tax will be applicable.
In addition to this, due to a unified market in the country, goods will be able to travel freely from one state to another without additional taxes.
All of these add up to easier methods of carrying out business and it would be less intimidating for new entrepreneurs to set up a business which will boost small businesses in the country.
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