GST(Goods and Services Tax) is an indirect tax that was introduced in India(2017) which subsumed all of the indirect taxes that were previously levied. Its implementation marked a huge change in the Indian economy in how people perceived taxation and finance. Registering under GST may produce several benefits that are great for Chennai-based business owners.
Chennai is one of the biggest business hubs in India that is filled with numerous opportunities for people from all kinds of career backgrounds. A bustling city with fantastic infrastructure facilities and a rich talent pool, it is one of the best places for someone to lead a career in India.
The high literacy rate is one of the reasons why Chennai is one of the best places to find new employees. An SEZ(Special Economic Zone) is present in Chennai which is one of the main reasons that people want to have their businesses here. There is increased trade, promotion of exports(goods and services) and superb employment creation.
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Benefits of GST Registration for business owners in Chennai
There are many benefits that the business owner must consider when they are selecting a virtual office for GST registration in Chennai. The business owner’s business will definitely benefit greatly and earn good business credit. We can take a look at some of the benefits below:
Simple to start a business
If a person’s business operating in multiple states, they would have to get VAT registrations from each of them(before GST). Each regulation would also have different rules and regulations which made things much more difficult. After GST had been introduced, multiple VAT registrations were done away with it as a single GST registration was applicable throughout the country.
Common National Market
Businesses may have been taxed unfairly in the past due to their state’s strong tax influence. This allowed them to tax their citizens heavily through a variety of indirect taxes such as VAT, service tax and central sales tax. Incentives were also used by the state government to increase its investment. Thus, this meant that goods and services would have differing prices in states depending on the state’s tax rules.
This ultimately led to the economy suffering greatly. With the introduction of GST, there is now a uniform tax on all the goods and services in the country. This also helped break down trade barriers such as entry taxes and check posts. A GST Council has also been introduced to ensure that every state has an equal say in the tax policies of the country.
Transparency
GST was introduced as an excellent way to reduce corruption in the country. A lack of transparency can be one of the reasons that many business owners lose money as they may be scammed unknowingly in the taxation process. These are some of the changes that have been brought under the GST scheme in order to reduce corruption:
- The GST registration and PAN have now been synced
- There is now proper matching and reporting at the invoice level
- Credits are properly reconciled
- E- waybills are being generated
- The movement of goods is now being tracked meticulously
- A GST Commissioner for Investigation has been appointed
New composition scheme for small businesses
If the amount of money obtained by a business within a certain time period is less than a certain amount, they can avail the benefits of the composition scheme. Under this scheme, a taxpayer will enjoy limited tax liability, high liquidity and reduced compliance(in terms of having to maintain financial records). There are certain conditions that have to be satisfied in order to avail the composition scheme:
- If a person wishes to use the composition scheme, they will not be allowed to claim Input Tax Credit(ITC)
- The person is not allowed to sell any goods that are not taxable under GST
- If the person who is taxable has many kinds of businesses under the same PAN, every single one of these businesses must be registered under the GST scheme. If not, the businesses have to drop out of the scheme.
- The words ‘composition taxable person’ has to be displayed properly by the person at their place of work
- The words ‘composition taxable person’ has to be mentioned by the person on every bill that they issue officially
Doing away with the cascading effect of taxes
Before the introduction of the GST scheme, there was a cascading effect of tax present. This meant that taxes would be taxed upon each other at each stage leading to an increased monetary amount that the taxpayer would have to pay. The GST system has done away with this cascading effect of taxes that previously existed. The following example will help in grasping the concept more effectively.
Assume that a consultant offers his services for Rs 20,000 and has charged a service tax of 15%(this would be Rs 3000). Then, he buys office furniture for Rs 15,000 paying 5% as Value Added Tax(VAT)(this would be Rs 750). After this, he has to pay Rs 6000 as output service tax. He will not be receiving any deduction on this value.
Thus, his total outflow will be Rs 3750. This is what would have happened before the introduction of the GST scheme. With the introduction of the GST scheme, the consultant would now pay 18% GST on his service charge of Rs 20,000(this would be Rs 3600). He would get a deduction on this value(Rs 750 which was already paid). Thus, he would have to pay Rs 2850 which is much less than the previously paid Rs 3750.
Straightforward registration process
The GST process is completely online which makes it incredibly easy to register for it. No one has to run around trying to register for it like they would have done for other taxes. The person who wishes to register under the GST scheme can go to the GST portal online and complete their registration over there.
They can even upload all of the documents that they need directly to the portal. An Application Reference Number(ARN) will also be given to them once they have completed their registration process. They can use this to monitor the status of their application. Startups in Chennai have greatly from this as they did not have to go from place to place to register under the benefited GST scheme.
Reduction in the number of returns
Before the introduction of GST, there were different returns and compliances for each tax. For example, excise had to be paid monthly, service tax had to be paid quarterly for partnerships or proprietorships and monthly for companies, and VAT had different rules for every state.
Thus, paying taxes this way was complicated for businesses which had to not only manage their finances but also ensure that all these tax returns were filed properly. There is only one field that has to be filed under GST as compared to before when there were so many returns for each individual tax. Since all of those taxes have been subsumed, the procedure to pay taxes has become much easier.
More defined terms for transportation of goods
Before GST was introduced, there were many different laws for transporting goods through e-commerce. They restricted the movement of goods based on several laws that used to exist specifically for them. With the removal of GST, the various complications regarding the transport of goods by this method were removed. Inter-state transfer of e-commerce goods has become much simpler. However, certain rules may be hard to follow for small businesses under the new GST scheme.
Improved logistics efficiency
Logistics is one of the most important aspects of the economy, especially for businesses that focus on trading. Since India is such a highly populated country with an ever-increasing demand that has to be satisfied, it is crucial that our country has efficient logistics. To put it in simple words, logistics is the movement of goods to customers from the point of supply or origin. Having excellent logistics efficiency would mean that customers would get their products in tip-top condition by the time that they expect to get them.
If this is not done properly, it could spell chaos for the success of the business. Before the introduction of the GST scheme, trade businesses kept multiple warehouses across different states so that they could avoid paying the Central Sales Tax(CST- for goods that are transported from one state to another) and state entry tax. Having so many warehouses may not be the best idea for good productivity as many of these warehouses are operating below their optimum level of success. With the introduction of GST, businesses will no longer have to worry about such taxes as they will all become subsumed under it. This will allow businesses to become more competitive which will add strength to the growth of the economy
Availing ITC(Input Tax Credit)
Under GST, businesses will be able to get ITC under their GST registration. By doing this, the amount of tax that they end up paying, in the end, will be reduced. This can help them save money that they can use towards obtaining profits for their businesses. Please take a look at the example that follows to understand ITC in a clearer way. If a seller has to pay a GST of Rs 500 at the end of the transaction for the final product and a GST of Rs 400 for the raw materials, they will only have to pay Rs 100 as GST to the government in the end.
Exemption for small businesses
Since the threshold for GST registration has been increased, small businesses having a turnover that does not cross the given threshold will not have to pay GST.
InstaSpaces: Best Virtual Office Services Provider with GST/Business Address in Chennai
InstaSpaces is completely dedicated to helping you register your business under the GST scheme. We have an incredibly experienced and efficient team that has helped numerous clients in the past register their businesses under the scheme. We will guide you through the entire process of registration and inform you of whatever you need to have as well. No matter how small your doubts may be, please do not hesitate to ask us as we will clear them for you patiently.
We provide GST registration for companies and businesses across all 28 states in India. Our team is exceptionally fast when it comes to the documentation process so we will help you get it done as soon as possible.
If you get a virtual office address from us, we will also provide you with all the documents that you need for your GST registration, such as the No Objection Certificate(NOC), electricity bill, and rent-agreement papers. This can save you a lot of unnecessary hassle having to do all of this on your own. We also guarantee you a full refund in case your registration turns out to be unsuccessful.
In these ever-changing times, the need to adapt is more of the essence than ever before. Please allow us to help you make this change and do it in the best way possible. We sincerely request you to put your complete trust in us as we embark on this journey together. No matter how tedious or troublesome it may seem at times, you can rest assured knowing that we are on it with you.
Phone:- +91–888-270-2020
Email:- [email protected]
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