How is the GST Bill a boon for startups

The GST passed could be a game changer for the startups and small and medium enterprises. The reformation unlocks many conveniences in various places like lower tax burdens and having country-wide operational advantages. The simplified taxation model multiplies the ease of doing business.

The ease of cross-border business is one such huge issue, which will most possibly get improved to a lot extent. Many transport vehicles get delayed moving across states due to small border tax and check post issues. The whole Indian market opens up for manufacturers as interstate supply becomes tax-neutral.

My Big Plunge spoke to some entrepreneurs, who explained how the reformed bill would change their business operations for the better.

Abhimayu Bhosale, the co-Founder and CEO of Live Health, explains how the registration process getting disentangled will help save much of the time.

“I think the biggest difference GST is getting is the ease of registration process for taxes. We no longer have to worry for service tax registration, Vat registration, TDS and other registration. Usually, startups have limited time and HR. At least 4-6 days a month are spent on calculating and paying taxes which is a lot of time valuable to me spent,” said Bhosale.

Urban Ladder CEO, Ashish Goel explains ET how seamless interstate would ease its operations. “It has been a pain point for companies operating in these sectors for a long time. Each state requires a different set of documentation, service taxes etc posing a lot of challenges in the market,” said Goel.

Goel continued, “This essentially means that at every state border, we encounter a different documentation which we have no option but to adhere to. For instance, we may require a different set of documents when entering Karnataka as opposed to those we used when exiting Rajasthan.”

With GST there will be better tax compliance, efficiency gains and reduction of leakages, due to which tax burden on most commodities would come down, Sachin Goel, the CEO of HomePunch.com told MBP.

As far as the logistics are concerned this also brings down costs associated with maintaining high stocks, leading to undisrupted movement of goods.

Dhruvil Sanghvi, CEO and Co-founder, LogiNext, told MBP, “The ease for transportation and manufacturing sectors will increase by a huge factor. There are so many planning and analytics tools available globally which Indian enterprises were unable to import due to the complex tax structure. They can now use advanced tools and technologies to improve their operations and trade cycles across the country.”

“As per our data, more than 10% of the time in trade and transportation was spent at state/city borders due to various tax checks and penalty payments/collections. This could now be reduced and our optimisation algorithms will be able to suggest better routes for users. In addition to that, the warehouse planning and positioning will also become much better as there won’t be a need to have many small warehouses across the states. This will unify the warehousing loads and reduce overall cost and time in the end-to-end supply chain,” added Sanghvi.

One of the main objectives of GST would be to simplify the taxation model in the country, which is currently burdening both customers and companies.

Vishwavijay Singh, Co-Founder, Salebhai.com, told MBP, “The sector faces a tough time categorising offerings into goods or services to charge VAT/CST or service tax. Few state governments have come up with additional taxes for e-commerce. There is a lack of clarity on e-commerce transactions under existing tax legislations. Once the Bill is passed, there will be a national-level GST which will be easy to follow.”

As far as mobile industry is concerned, I am expecting Online Exclusive models prices to go up as they are operating via low VAT areas right now, said Shrutam Vijay Desai, the co-Founder of OnlyMobiles.

“The removal of Octroi, LGBT etc should, however, help many handset companies to improve the bottom line – which is a much-needed relief. Indirectly, GST will arrest the predatory pricing of e-commerce marketplaces. However, Central Government and State Government both should ensure that they do not impose entry tax like duties either on E-Commerce or Mobile Phones,”

The GST structure will further provide higher exemptions to new business, businesses with a turnover of Rs 10 and 50 lakh will be taxed at lower rates.

R. Narayan, Founder and CEO, Power2SME, told MBP, “Operations with a revenue of Rs 10- 50 lakhs can opt for the VAT Composition Scheme (which would lower the tax rate), but that has separate criteria and isn’t suitable for everyone. With this, those with a revenue less than Rs 10 lakhs need not apply for GST at all.”

Though it has many positives for the startups and entrepreneurs, it is not all good for everyone. Simran Sial, the co-founder FindMyStay says how it will further make travelling and booking expensive.

“Since we are a service industry and service tax have a flat 15 percent across India, implementation of GST will make travelling and booking hotels more expensive for customers as it is pegged to go up to 22 percent.”

The new age business with digital payments, e-Commerce, online services face regulatory hurdles due to tax laws not updated as per emerging business practices, said Sumit Khandelwal, the co- founder of Giftxoxo.