The Goods and Services Tax in India (implemented as of July 1, 2017) is an accumulation of various indirect taxes being charged by the central and state governments. Registering for GST allows you to avoid multiple receipts, payments, and compliance required in a case of operating a multi-state business.
GST applies to the businesses involved in manufacturing, sales, and consumption of goods and services throughout India (Except state of Jammu and Kashmir).
With the centralized taxation, the business grounds for startups have become way better than before, as they can operate nationwide without having a burden of multiple state compliance and can better manage their financials.
If you are a new startup or have been in business for quite some time, it is important to know the basics GST, register for GST and file return in order to do business with much ease. This article will list the points related to GST return filing that one must know being a startup founder or a small business entrepreneur.
1- As a startup you must be aware of the fact that the GST is a value added tax which is charged at all stages of the supply chain, i.e. right from the manufacturing to the end product. So, it is must for a business having GST registration (even a dormant business) to file GST returns in accordance with the specified return due date schedule.
2- It is very important to file the GST return correctly and on time, so the business can calculate accurate tax liability and remit payments or request refunds, whatever the case it is. Since, it’s a new type of tax and, it requires a deep understanding of the taxation process and the laws & regulations associated with it. As a startup, you might not be able to do it yourself and hiring an accountant can be an expensive affair, so the right idea is to outsource it to an expert.
3– In case if you are a business not yet registered for GST, you may be using some accounting software or ERPs for filing tax returns including, VAT, and service tax etc. This is the time you must get registered for GST and switch to a better ERP too. To avoid increased costs of purchasing new software and training employees, you may look for cost effective packages offered by IndiaFilings.
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4- If you are an eCommerce startup, that sells products online on its own or allows multiple sellers to use your platform to sell their products, you must update your system according to new GST regulations and make sure to collect GST from the sellers and update the relevant records on your platform as a part of compliance program. You must also make the GST record available for sellers, so they can file their returns accordingly.
5- There are a lot of other points to consider, depending upon the industry your startup falls under, i.e. manufacturing businesses are most likely to be taxed more for first few years, GST comes with a hike in inflation when first implemented, and so on, so be prepared and do get an advice from experts to know how to set right pricing, and what careful measures should be taken while filing returns.
The Bottom Line:
The GST implementation in India is at very threshold right now, and change is definitely never easy. It takes time and comes with many challenges. However, once it’s fully implemented, most of the challenges rising right now, will just wipe out, and India will become a single big market with no compliances issues for businesses to deal with.