Challenges faced by Young Entrepreneur due to the implementation of GST.

GST came into origin from July 1, 2017. Goods and services tax (GST) is a standard tax which is followed all over India. It is also known as "ONE NATION ONE TAX." GST changed the Indian tax system.

With the aim of attracting more Entrepreneurs, the government of India is supposedly evaluating the tax regime for startups, but in this current tax rule, every startup and small-scale business do face some problems.

As in today’s competitive business world, the entrepreneurs face many challenges. India’s GST policy is a crucial point for many Entrepreneurs as it affects all their businesses. GST has increased the regulatory burden on startups. Thus, a startup may face trouble in understanding and adapt to the new tax payable system. Here, is the list of the following challenges which is met by a young entrepreneur due to GST implementation.

• Many Young Entrepreneurs with small-scale businesses face difficulties due to the tax burden. In an early stage, the tax has been charged on those manufacturing companies if the turnover exceeds Rs.1.5crores, liable to pay excise duties. Now after the implementation of Goods and Services Tax (GST) they had reduced the standard to Rs.20 Lakhs which directly affect all the businesses. In the services sector, the rate has been increased 15% to 18%. This reduction will significantly impact the Entrepreneurs’ working capital. In GST, money has to maintain in the form of electronic credit ledger with the tax department.
• In this trending world, everything is online. Goods and Services Tax is also an online taxation system were GST Registration and filings take place. Unlike earlier, nowadays even businesses themselves change from paperwork to technology. Here, the problem may arise only when there is a lack of proper technique or due to inadequate knowledge against it. The entrepreneur might face difficulties to adapt to the new policy.

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• Those businesses which are involved in the sales process have to register GST. As per GST law, the entrepreneur has to register GST according to his business activity carried out. So it usually depends on business activities across the states.
• Unlike the old tax system, GST returns to filling on a monthly basis. Entrepreneurs need to register nearly 36 returns during a financial year. And filing GST return every month is time-consuming. Entrepreneurs who even forgot to file single returns are penalized Rs.100/- a day and compliance rating on the GSTN portal is reduced.
• There is no fair play in tax pay system under GST law. Whether it is a high-end product or low-end product, equal tax has to be charged. This lead to an enormous problem for small startups to grow, they may face difficulties in competing against large businesses. In this case, it is like there is a scope for large firms to step forward and small businesses to stay back. The rich are becoming more vibrant, and the poor are growing more impoverished.
• GST is increasing the operating cost of the businesses. For filing, GST returns Entrepreneur have to appoint an Accountant with technical knowledge. For startups with low capital hiring an accountant and paying them is a burden to the owner. And also Entrepreneurs need to train his/her employees in GST compliance, and this leads to increases in expenses. It is difficult to maintain separate books of accounts and follow the records of various activities carried on every state involved in every single transaction. For remittance, capital is required to maintain. To help startups to manage the tax system the services of licensed third parties firm comply with the GST regime.

For this type of services, startups can join their hand with the licensed third parties for convenience services which range from Rs.1000/- for best of the best service you can contact Afleo.com.

Conclusion:

In this article, we have mentioned the various challenges met by the entrepreneur due to the implementation of GST. Any plan to succeed takes time. Same applies to GST. GST is a long-term plan. Now it creates a lot of problem and burden for business-man and common-people but its positive impact can be seen in the future, and it will be favorable not only to the common man but also to the country. Those Entrepreneurs who face problem in GST Registration and GST Returns filling due to technology issue can contact us on www.afleo.com. We love to help you. The cost for the same is affordable you can save 30% cost for GST Registration.

Mr. Keval Shah is the Founder & Ceo at Afleo.com, It is a technology-driven business services platform dedicated to helping Startups & Entrepreneurs easily start and grow their business, at an affordable cost.