Goods and Services Tax (GST) is government of India’s indirect tax imposed on supply of services and goods. It is a comprehensive tax that has subsumed most of the other indirect taxes. It is multi-stage and destination-based since the tax is collected at consumption point. GST was introduced into the Indian taxation system on July 1, 2017 with a purpose to replace several previous taxes mandated by the state and the central governments.
Who is Mandated to Register for GST?
- GST is mandatory for businesses over 40 lakhs INR of annual turnover. In the case of North-eastern states and the hilly states, the mandatory annual turnover amount is 10 lakhs INR. Some businesses have compulsory registrations while others have a choice to register as per their convenience and needs.
- Businesses registered under pre-GST law like Service Tax, VAT, and Excise are mandated to convert to GST taxation.
- Businesses operating from different states need different GST for each of the states.
- Small suppliers can opt for Composition Scheme under GST.
However, even if you are not in the mandatory GST tax bracket, still it is beneficial to opt for a GST registration. There are many perks to GST registration that would help your business to grow and attract greater customers. Registering for GST is also quite simple and can be achieved in few easy steps. Read the article to know about the 8 reasons why you should register for GST.
1. Contribute to Policy Making
The government of India engages in policy making based on the pool of data available at its disposal. Most of the data is retrieved from the businesses registered under the GST threshold. So, by registering for GST, you contribute by giving a bigger pool of financial data for administrative analysis. It allows the government to forecast the progress of income tax revenues and engage in suitable policy changes that would have a direct impact on your business.
2.Develop a Market Presence
In a huge economy like India, it is difficult to establish your market presence. The bigger companies have a mandatory GST registration policy, so by applying for GST you give a reason to think that your business is in league with the top players. This helps in increasing credibility amongst your patrons. The vendors and customers feel that with a GST registration your company must earn a basic lower income and this aids in developing your market presence.
3. Avail High Liquidity
GST gives small businesses an option to register as a composite tax payer. A significant advantage of being a composition supplier is greater monetary access for businesses. A regular taxpayer needs to pay a standard rate of output tax on the business supplies and could expect a return only if his individual vendor files for an online return that needs to reconcile with the taxpayer’s own return. As such, the businessman may find a permanent blockage (as input credit) for a huge part of the working capital. Yet, in the instance of a composite registration, the taxpayer would find just a nominal output liability with no dependency on his individual suppliers for their tax filings.
4. Engage in Restriction-free Interstate Business
GST registration allows you to engage in restriction-free interstate business, wherein you can establish your warehouse at strategic locations within the country like the Nagpur city that earlier acted as a zero-mile Indian city. Thus, the removal of restriction saves from fruitless logistic expenditure and increases the business returns with regards to goods supply through transportation.
5. Take Input Tax Credit
As a voluntarily registered business, you could take input credit on your corporal purchases and input services such as consultation and legal fees. It aids in the enhanced margin for business and increased profitability.
6. Makes your Business Compliant and Gives it a Better Rating
GST registration makes sure that your organization is compliant and scalable and you are saved from any futuristic registration barrier. Moreover, GST allows you to maintain the compliance rating and if you follow all the requisite norms then this would lead to greater business opportunities.
7. Superior Market Standing
GST registration offers superior market standing to your business. As a registered GST organization, you show credibility in your trade. Hence, you benefit from several advantages like getting easy loan sanctions and being a preferred customer for renting premises.
8. Provide an input tax credit to customers
GST provides legal recognition to your business. This allows you to generate taxable invoices. Simultaneously, purchasers also have the advantage of taking input credit on their procurements. It aids in expanding the consumer base and gives a competitive edge to your business profile.