GST Benefits for Start-ups and Small Businesses in India

The abbreviation GST means Goods and Services Tax. It is an indirect tax that has superseded previous indirect taxes including excise duty, VAT, and service tax. Our Parliament enacted the GST Act on March 29, 2017, and it went into effect on July 1, 2017. 

Since the government enacted the new GST Act, Indian taxpayers have benefited with significant relief. The introduction of this new GST statute has resulted in the complete abolition of other taxes.

The new regime, based on the “One Nation, One Tax” principle, has made it simpler for the Indian government to add many taxpayers who have been running away owing to inadequacies in the tax collecting system to their GST radar.

Almost all the primary areas where GST has had a big impact involve employment and expanded chances for start-ups and Small Businesses through the ease-of-doing-business index, accumulation of job prospects, cross-border commerce, and much more. Here you will know about some advantages of GST for small businesses.


  • Logistical Efficiency

It has improved logistical efficiency. The logistics industry in India needs to operate and manage multiple warehouses around the country. It assures that existing CST and state entrance taxes on interstate goods transit are avoided. Warehouses that are operated below their operational capacity raise operating costs.

  • Interstate transit

Interstate transit of products is permitted, resulting in warehouse consolidation throughout the nation. And most of the credit goes to the GST, which has brought India together by abolishing all barriers on the interstate flow of commodities.

  • e-commerce businesses

The GST decision has piqued the attention and investment of several e-commerce businesses and warehousing operators. Thereby, cutting logistics costs that increase revenues for start-ups engaged in commodity shipping.

  • Typical online registration

GST has superseded previous taxes such as excise duty, VAT, services tax, and sales tax. Now, the companies have to register for one tax, which is the GST.

Components of GST

GST is broken down into three components: IGST, CGST, and SGST, with just one registration necessary to utilize all three services. As a result, a significant amount of time and physical documentation was wasted, as most of the uploads are done online and are digitally signed. Now, a unique registration is required for each state, but the procedure stays the same, but done online and is confirmed and authorized.

Single national market in India

This is seen as a significant potential for small businesses; formerly, most sectors had to maintain massive distribution and logistics networks owing to their designs, which had to fulfil the basic standards of states. This shared market throughout India is ideal for corporations and enterprises looking to expand their national presence with the least amount of expenditure.

Elimination of the cascading impact of taxes

The GST unified all indirect taxes under one roof. The cascading impact was “tax on tax.” To relieve this, the input tax credit was implemented as a significant benefit to enterprises.

increased GST registration threshold

Prior to the adoption of GST, every business with a yearly revenue of more than Rs 5 lakh was obliged to seek VAT registration. Any firm with a turnover of more than Rs 40 lakh in a fiscal year is now needed to register for GST, and with a ceiling of Rs 20 lakh for service providers.

Many small businesses and start-ups in India have benefited from the increased GST threshold.

Tax credit for purchases

Several start-ups in India are in the service business. Prior to the GST, they were required to collect and remit service tax to the government. This issue has now been resolved. The GST has brought various indirect taxes within its purview. Start-ups may use the GST to offset the tax paid on purchases against the tax paid on sales.

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