GST will Improve Ease of Starting a Business in India:- While starting a new business in India, businesses currently have to get VAT registration from the State’s Sales Tax department. Since, each State has different procedures and fees for VAT registration, it is hard for businesses operating in multiple States to obtain and maintain compliance with VAT regulations.
With the implementation of GST in India, the procedure for GST registration would be centralized and standardized similar to service tax registration. Under GST regime, business would no longer have to obtain multiple VAT registration – as a single GST registration would be applicable across India. The procedure for obtaining GST registration would also be standardized, thereby improving the ease of starting a new business in India.
Integration of Multiple Taxes in GST:- Currently goods and products are taxed under the VAT regime implemented by State Government and services are taxed under the service tax regimen implemented by the Central Government. As VAT is implemented by State Governments, each of the State has different VAT rates, VAT regulations and VAT procedures – leading to complications. Further, in addition to VAT and Service Tax, there are various other tax regulations that businesses must comply with like Central Sales Tax (CST), Additional Customs Duty, Purchase Tax, Luxury Tax, etc.,
GST Exemption for Startups and Small Businesses :- Currently, VAT registration and VAT payment is mandatory once a business crosses an annual turnover of Rs.5 lakhs in some States and Rs.10 lakhs in a few other States. The multiple VAT legislation enacted by each State creates confusion and complexities. Once GST is implemented, businesses with a turnover of less than Rs.10 lakhs per annum would not have to register for GST nor collect GST. Further, businesses with an annual sales turnover of Rs.10 lakhs to Rs.50 lakhs may have to pay GST only at a lower rate. Therefore, once GST is rolled out, thousands of startups and small businesses currently having an annual sales turnover of Rs.5 lakh – Rs.10 lakh would be out of the tax net providing relief to them from collection and filing of GST returns.
GST will Improve Ease of Doing Business in India :-Currently, businesses like restaurants or computer sales and service – which sell goods and provide services as a package have to comply with both VAT and Service Tax regulations. This creates complexity for the business and they have to calculate taxes for the transaction based on different rates for different items. With the introduction of GST, the distinction between Goods and Services will be gone – thereby making compliance easier. Further, invoicing will be easier for businesses as only one rate would be adopted.