Goods and Services Tax sure simplifies and brings all indirect taxes into one umbrella. But how does it affect your small businesses, which for a woman entrepreneur are her years of efforts. Come, let’s take a look as to how GST affects you.
Input Tax Credit
When a small business manufactures a product they need to pay 10 % tax to buy the raw material and then sells it to the distributor who again needs to pay a 10% tax on the previous amount for the purchases made by them. This goes on all through the supply chain.
Perks of GST is that it gives the manufacturer Input Tax Credit so that they can avoid paying up the Double Taxation which then brings down the effective tax rate.
Small businesses run by women can now fall under organized sector. How? To gain all the benefits under GST such as Input Tax Credit, the businesses will need to have proper invoice updates. This will help women entrepreneurs to formalize processes and run their businesses in an organized manner no matter how small it may be.
On par with Corporate Houses
Corporate houses save on paying tax during interstate movement of goods through stock transfer. However, small enterprises can’t do that do to the lack of infrastructure and they obtain goods through interstate sales. This leads them to pay up Central sales tax.
Now, through GST the stock transfers will be taxed too thus bringing the start-ups on par with corporate houses.
Benefits from Digitization
Gone are the days of kaccha bills and dealing with middlemen. Women entrepreneurs can actually benefit from the digitized processes that GST brings along with it. Small businesses will be encouraged to pay taxes through simplified operations which will lead them to contribute in a great way to the country’s economy.
All in all, Goods and Services tax will simply the mammoth maze of the current tax regime and thus simplifying it for the small businesses especially women entrepreneurs and may even help curb inflation to some extent. Our advice to women entrepreneurs is to stay updated and reap the benefits of GST.