GST Advantages for Startups and Small Businesses

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The Goods and Services Tax (GST) – GST Bill was passed in Lok Sabha on 6th May, 2015. The concept of GST in India has been mooted and evolved for over a decade now. With the GST Bill passing the Lok Sabha, it is now slated to be presented to the Rajya Sabha. Once cleared by the Rajya Sabha, the Bill would set in motion the rollout of GST in April, 2016, transforming India’s indirect taxation system. In this article, we review some of the major advantages of GST implementation in India for startups and small businesses.

GST Overview

GST or Goods and Services Tax is a value added tax, levied at all points in the supply chain with credit allowed for any tax paid on inputs acquired for use in making the supply. Therefore, it is the end consumer who bears this tax as the last person/entity in the supply chain. The introduction of GST in India is expected to result in major simplification of indirect tax structure at both Centre and State levels – replacing the multiple layers of complex taxation currently existing in India.

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.,

Under GST regime, many of the taxes in existence today would be subsumed and made into one tax. The following taxes are proposed to be subsumed under GST:

Integration of taxes under GST

Central Taxes subsumed under GST

  • Central Excise Duty (including additional excise duties)
  • Service tax
  • Additional customs duty (CVD)
  • Special Additional Duty of Customs (SAD)
  • Central surcharges and cesses

State Government Taxes subsumed under GST

  • Value Added Tax
  • Central Sales Tax
  • Octroi and Entry Tax
  • Purchase Tax
  • Luxury Tax
  • Taxes on lottery, betting & gambling
  • State cesses and surcharges
  • Entertainment tax

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.

81 Replies to “GST Advantages for Startups and Small Businesses”

  1. Prahu Haladker says:

    I am into plastic recycling. I buy post consumer plastic waste from rag pickers and small vendors.this waste has already been taxed everal times during it’s journey to consumer and post consumer it has been disposed off as municipal waste on streets/roadside. the rag pickers and small vendors collect these waste and sell it to us at a price.they are very small dealers and hence exempted from registration and taxes. When I buy waste from them and add value with recycling, the tax should be only on the value addition at my end. Please clarify.

    1. Admin says:

      Although your raw material is scrape but by recycling you are creating a new or different product for the end-user. The usage of that scrape material changes, thereby making tax levy-able on the entire product value (including scrape) which i feel is justified. Please discuss the said matter with and expert as well. GST might bring in subsidies for such category of industry.

      Thanks for your visit !

    2. subroto s ghosh says:

      i’m a sub-broker in share market, what will be my gst percentage to pay gst

  2. Shreshtha says:

    If someone has two shops. Each shop have turnover of 7 lakh. Then he have to register for GST or not? Because in total hit turnover limit is exceeding 10 lakh.

    1. Admin says:

      Dear Friend, The turnover limit is still not specified, but is supposed to be quiet higher than 10 lakh.
      As far as the definition of turnover is concerned, it should include all the transaction registered under one PAN, so if you have two shops, both registered under one PAN then total turnover of both should be calculated to reach the registration limit.
      Please use “SEARCH” section in the site to find various articles related to your query. Experts too feel free to reply!

  3. manjunath says:

    Dear sir,

    I am planning to start online business over india. means supplier/seller with online portal ie. Flipkart. for this what type of basic requirments i need to do.

    1. Admin says:

      You will have to understand what role your portal shall be providing. If you are going to be service provider, then you shall have to enroll for services tax and your material supplier should have a VAT number. Many states have imposed double taxation i.e. considering your services/sales as Vatable from the Point of Sale, so kindly contact a local tax consultant to walk through the Service tax/VAT-structure.
      GST is the actually reason to come in India, to clear lot of ambiguity of online transaction. Thanks for visiting.

  4. sanny kumar says:

    mai ek village me chota sa computer institute chalata hu. kya GST mere liye v jaruri hai

  5. Arun says:

    Hi,

    I own a ladies garment shop (boutique) in Delhi, as of now I have only registered the shop name under the department of labour. Should I go ahead and register for VAT or should I wait until the GST is launched.

    Also, do I need to do any other formalities to avoid any legal or sales tax actions! Please advise.

    1. Admin says:

      Broadly, you should start preparing for GST by registering your related VAT department.

  6. Sandeep p Chougale says:

    My firm is already vat register but my turnover is 7 lakhs I can register GST yes or no? Pl give suggestions me.

  7. Monika Shrivastva says:

    I am a house wife and also a PAN no. I want to start online sell mobile accessories through flip kart, Amazon etc. from home. My starting product is less than Rs. 500. Please suggest GST registration necessary for me.

    1. Admin says:

      Hello.

      GST registration shall be mandatory after one achieves a certain limit of turnover. But in your case, since you wish to affiliate with online websites as a seller, it is desirable to enroll for GST as and when when it shall be applicable, since these web markets have a mandatory pre-requisite. Hope it helps.
      You can even begin local vat registration if you are in a hurry to begin such sort of business.

      1. Monika Shrivastva says:

        Thanks Sir,

        Can I start selling without registration in India. I will do registration when GST will implement (like July.17). Please suggest.

        1. Admin says:

          Hi. There are certain state level turnover limits, below which you will be considered an unregistered dealer, but still can become a seller. After achieving those threshold turnover limits you shall have to go for VAT or Service tax registration, in most of the cases. It is ideal to register now and start doing business as a registered dealer, rather than wait for GST to set in. Thanks.

          1. Monika Shrivastav says:

            Thanks , I will sell through e commerce web site like Amazone, ebay, etc.. so it will sell in all over India. There is no problem?. My item (mobile accessories) wt. is below 100 gms and rate below Rs. 200/- turnover below 2000/- per month and dispatch through only courier. Please suggest.

    2. vishal says:

      Unless until ur business not goes more than 10 lac no need to worry about GST.
      if you need signature mobile accessories you can contact as its whole seller and authorized for signature brand mr. vishal NOIDA -DELHI

  8. Pratik says:

    I have Vat registration in multiple states under interior contractor . What’s the benefit of GST for me ? Will I need only GST registration at one state only and that shall be valid in all states of India ??

  9. Devendra Singh says:

    I do job work for clients like i print garment and give it to client they mfg the final product and sell it. What is GST rate applicable for me. Thanks

  10. HAFEES K S says:

    Hello Sir, what is turnover required for the regestration of GST…if anyone have low turnover is he he required to do enrollment in GST and for regestration.Kindly specify in details.

    1. Admin says:

      Hi.Currently the registration is open only for TIN holders, as a part of migration process, from old system to new GSTN system. It is better to wait for fresh registration after GST is implemented.

  11. Deepak says:

    I m small supplier of all type of goods to central govt organiisation…i have got tin …my turnover never crossed 5 lac…should i reg in gst….is it profitable for me

    1. Admin says:

      If you are going to be in any sort of business / services in future for a longer term , yes it is good to have some sort of registration, including GST.

  12. Minaxi S. says:

    Hi,

    i am going to start online business, but i dont have TIN no. but want to start between 2-3 months so please confirm should i wait for GST applicable.

    is there any solution to start my business.

    1. Admin says:

      It is always advisable to take TIN no. ASAP. But if you do not want to invest much in acquiring a TIN number, then you can wait for GST to set in, as it will be very easy to get a GST number because the registration process will be straight forward.

  13. Minaxi S. says:

    But how would i know when the GST will set, do you have any idea???

    so that i can think further

    1. Admin says:

      Well we can guess it from 01/07/2017, But the actual clarity will be given by the government in April/17.

  14. Minaxi S. says:

    Thank you so much..

  15. Pradeep B says:

    I have started shop this financial year & turnover is less than 5 lacs this year. Now, next year turnover might increase Should i apply for VAT number, or should i wait for GST roll out ?

  16. Shivani says:

    My father have a cloth shop in a village in up and total sell will around 7-9 lakh annual. But they have not registered their shop till now. Is it compulsory to get TIN NO or GST NO. Please help me

    1. Admin says:

      For small trader, there is a turnover limit of 20Laks as exemption for enrolment. And as far as TIN No. under VAT is concerned , it depends on state about the turnover limits. Hope it helps. Thanks

  17. VINEET KUMAR YADAV says:

    SIR JI,

    MERI REDIUM STICKER KI RS.100000/ SHOP H KYA MUGHEY BHI GST ME REGISTRATION LENA HOGA

  18. kajal says:

    sir

    i have mobile shop . its turn over is not 20lakh but i have purchesh for some mobile and all mobile accessory. so i have register form gst number ? or what ? plz help me

    1. Admin says:

      It is not compulsory for Dealers whose annual turnover is less than 20 Lacs to register in GST, but whatever GST paid by you shall go into your cost and will not be able to claim it.

  19. Jai Kumar Jain says:

    I am manufacturer cum traders and have Interstate purchases and sales.My annual turnover was 40 lakhs but in the current year it is likely to be below 20 lakhs. Is it necessary to get registration under GST. If it is necessary to take registration then can i take benefit of composition scheme. If not, then can i awail credit of my CST puchases @2% against form “C”. Pls clarify.

    1. Admin says:

      Turnover of 20 lakhs will be calculated on previous year basis. So yours exceeds that. Composition scheme depends on business to Business, but if you are able to control your accounts it is good to not take composition. Please check this with your consultant. C form’s 2% credit will be available or not is doubtful. Thanks for your visit.

  20. আতিয়র রহমান says:

    i have a pan shop, annual turnover 300,000.00
    how many tax under gst

  21. rishabh tanwani says:

    hello i wan to start my own new business papad business i will manufacture papad through machines and turnover wiil be less than 20t lakhs than plz tell me that do i need to apply or register for gst number.

    1. Admin says:

      Not required if turnover is less than 20 lacs.

  22. SARTHAK AGRAWAL says:

    Rakhi was taxfree item in VAT. What is the tax rate in GST? Under which hsn code it needs to be considered?

  23. Anshu says:

    Hi,

    I m launching a home based start up. My turn over will b less than 20lac. My supplier is charging me gst. Will I be eligible for getting tax credit. What will be the procedure for getting tax credit

    1. Anonymous says:

      @ Anshuh
      Hi, This is Nishit Ballu, If your expexted turnover is less than Rs 20 lacs(For some states limit is Rs 10 lacs), its optional to get registered under GST. If you have not registered, than GST credits on your inward supply will be not allowed and it has to expense out.
      And if yo are registered than you will get credit of the same.

      Thank you

    2. REJI MON P R says:

      he will get tax credit, after paying the same through cash/online

  24. vishnupriya says:

    Hi I am planning to sell crochet purses from my home through amazon .i am not a professional seller and i am just trying whether i can sell . I am not investing any sum or starting shops.do i need to enroll in gst ? Or anyother taxes ?

  25. kamal says:

    if i applied for composition scheme in GST then can i issue TAX INVOICE TO PARTY.

    1. Anonymous says:

      @ Kamal
      Hello Mr kamal, This is NIshit Ballu, If you have opted composition scheme under GST, you have to issue Bill of Supply, you can not issue tax invoice.

  26. Gajanana says:

    HI I am street vendor in karnataka – udupi ( seeling toys ) in do not have any fixed shop my tour over i 5 lakhs i dont have any TIN no or GST my my suppler is in Mumbai he is having GST number and charging me has per GST rate 12%. can i continue to my goods from out-state is their any procedure for purchase out-state goods without GST number, is their any problem in custom department

    Regards
    Gajanan

  27. Anonymous says:

    I do job work for clients, I do printing on garment and return to client who supply garments to me.They mfg the final product and sell it. What is GST rate applicable for me. Thanks. Please reply

  28. Sanjay says:

    I took a franchises (hotel management college) in odisha, my annual turnover more than 20laks , so shall I eligible for GST

  29. Mayank Kumar Verma says:

    Hello, I am a small scale wooden manufacturer, my turnover doesn’t exceed 20 lac, my workshop is in a small town and i have to send my goods in other cities far from my town which requires BILL / INVOICE. But according to GST, i don’t fall in its category. What should i do to sell my products ? I am going through huge income crisis already. I don’t have any option rather to beg infront of other GST holders to provide me BILL. 28 % tax on furniture ? i make small wooden gift items which i sell for Rs150. My profit in 150 is 20 rs. GST on plyboard is 28%. My purchase was 1350 per pc and now its 1728 per pc. Cost of my product was 130 + 20 (profit) = 150, Now Cost is 167 + 20 (profit) = 187 + 52.36 (28% GST) = 239.36 ( selling price ). Now can anyone explain me, how will i survive in the market ?
    I can’t sell online – gst mandatory
    i cant sell in other cities – gst required
    i cant sell in other states – gst and state gst required
    i dont have local buyers – live in small town
    What should i do ?

    1. Sarita says:

      No replies yet to this query ??

      ADMIN !! Where are you ?

  30. Lucky says:

    Sir,
    I have no tin number, I started my business at July 2014. My farm is registered in labour office.
    I have turnover something 18-24lacs per year honestly. Should I apply for gst registration? & can I register gst self?

  31. vikas says:

    someone offer me to work in a government project, but for taking that tender, it is compulsory to have a business. So, i decide to do startup of a new business. Don’t know how to register a firm. and what documents i need.
    Many guys told me that don’t apply for register a firm. you directly contact to a CA and inform them to get GST number. and, they will selfly register the business name. Is it true ?

    Can i run a small company by taking GST number only ?

  32. Kashif Khan says:

    sir i have a iron and steel shop in karnataka yearly turnover of shop is 24 lakhs but am paying tax to supplyers shall i regester gst fr my shop

  33. srihari says:

    Hello Sir,
    I am starting up a small Readymade garment shop in hyderabad, the goods which i am going to buy from other state and they are charging me gst, and my turnover would be known only after running the business successfully for this is it mandatory to take gst for bringing the stock from other state, if i take the gst also what is the benefit for me pls clarify me sir

  34. Anonymous says:

    Mine is a startup and I understand that I am exmpted from GST registration unitl my turnover reaches Rs.20 lakhs. But my inputs supplier is levying GST as applicable for the goods he supplying.

  35. Viswa Prakash says:

    Mine is a startup and I understand that I am exempted from GST registration until my turnover reaches Rs.20 lakhs. But my inputs supplier is levying GST as applicable for the goods he supplying. Am I exempted from paying the same and how to avail it?

  36. Anonymous says:

    HI I am from Kashmir I am planning to start a dry fruit whole sale business, where in I am planning to export dry fruits from Kashmir to other states of India. Can you please explain me how GST will be applicable on my business and how do I register for it.

    Thanks nad regards
    Ahmed Jehangir

  37. pramjeet says:

    hi Sir,
    I run catering business in gurgaon, My business turnover is 12 to 15 lakh. I have GST registration in general. Should I file GRTR
    Monthly or Quaterly?

  38. Pradeep Pillai says:

    I run a small establishment providing Accomodatioin Services have 20 Room A/c deluxe hotel ( no star ). The location is such that I am only able to provide room for fractional duration of the day and rates are for Hours as mostly pligrim tourist visiting temple. They freshen up and move on to next destination and 80% buisness of room sale is for short duratioin. The tariff listed is for a night which is Rs 1800/night and fractiona duration (slab of four hourswhich is lower at rs 999). How do the GST (CGST & SGST) get applied. Please guide how the GST shou;ld get applied.

  39. Parag Joshi says:

    Just newly started business is it compulsory to get gst registration for service or mutterial supply in Maharashtra

  40. Anirudh Sood says:

    Hi Sir,
    I want to start a online store to promote widow by selling home made products and for that purchasing raw material included GST is not possible. So what are the exception in this area.

    Thanks,

    Anirudh Sood

  41. Vijay Kumar says:

    Hello Sir,
    I from Varanasi I want to start a electrical switches shop . I have labour shop act registration can I generate bill to customers without get details,can I receive invoice on my firm nm without get details

  42. Jerome says:

    I want to buy candles from other state and to resale in my district. It was a small business to start my yearly income will not more than one and half Lakh I guess I want to get GST or not what are benefits I register GST please explain me

  43. Sanjay says:

    Hi I have a call center and i provide services outside of India. Do i need to register for GST (turnover 5-6 cr p.a.) and how can I claim GST being charged to me for office space and internet services i use.

    Regards

  44. Vikas chaudhary says:

    I have a travel agency . and turnover is high then 10 lakh but not profit. Do we also need to pay gst on profit as well.

  45. K Sravan Kumar says:

    Hello sir,
    I am starting a small service based business ( facility services ( house keeping service) ) registration also done recently as JK facility services and yearly income may Les than 1.5 lack , please give me a suggestion to go GST registration or not

  46. Gyanchand says:

    Sir I wont have shop but I need gst because I’m buying bags and selling to other state I have turnover of 10 lakhs per year

    1. app27188 says:

      your turn over less than 20 laks also you register gst. thia is inter state supply

  47. Arun sanyal says:

    I am going to start business as a dealer for Valve items. along with Third party inspection at request of customer. I have completed GUMASTRA registration. But do not have GST No. Can I start business without GST no. How tax system to be there for GST. Please help me to understand the same.

  48. B SUMANTH says:

    Sir, with out any kind of registration can i sell my marble idols. if it is illegal what is the legal procedure. kindly suggest me how to set a business.

  49. uma says:

    Hii,
    we are gonna start a building business like, constructions of buildings
    i have already registered with GST and i got the GST identification number ..
    now if we purchase any goods we are paying gst .. will i get tat amount refunded ??

  50. Bhumika says:

    I am a housewife and want to start selling my handmade products through online portals such as Flipkart and Amazon, but they are asking for GST no. I have not yet registered anywhere and for GST registration they are asking for company PAN number and “Legal Name of the Business (As mentioned in PAN)”. How should I proceed? I am very naive so please suggest, even for a very small business like this do I have to register my company and then do GST registration.

  51. Mp Sharma says:

    I have IT Company Pvt.Ltd i have GST no VAT everything who is mandatory for company but my turnover is less then lacks so for us GST pay for government is mandatory or not

  52. Rani Bagdia says:

    Hi,
    I am planning to start a small scale business of Candle selling. When I try to list my product on Amazon, Flipkart or anywhere else, I am asked for GST number or I can sell only if I provide printed bill. I understand for small-scale business with turnover less than 10 lacs we don’t need GSTIN, so then how do I start selling on Amazon, Flipkart or even to other places.

  53. Israr says:

    I have started my business before one month.. on aproching client for order they are asking for GST number, also for current account bank demand for GST ,,, is that I HV to take GST number for doing business.

  54. davis says:

    sir Iam small business man fo cctv installation my turn over is 2 to 3 lakh for month i havis gst now my adioter ask me file it return and pt is it needed

    1. Admin says:

      If you register yourself for GST number, then you shall have to oblige your duty by filing GST returns, even if your turnover does not exceed Rs. 20 Lacs annually. Alternatively you can apply cancellation as per your eligibility.

  55. jeyakrishnan says:

    i want to start up a small hotel with expected turnover around 10 lakhs,for financial assistance ive approached my banker for getting loan, but my banker insist me to get GST no. How can i proceed? if , i ve registered with gst then i need to collect service tax from my customer,it will increase the food cost,how can i manage?kindly give me a suggestion.

    1. Admin says:

      Once registered in GST, you shall have to pay the tax and file returns.

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