Written by : Rajiv Singh

A Chartered Accountant in UK with 15+ years of experience in FinTech Consulting, Accounting & International Taxation. I enjoy being a Social, Foodie and Father of two young children, reachable at linktr.ee/RajivSingh.

How Is Getting GST Registration Proving To Be A Boon for Small Businesses?

Rajiv Singh
Rajiv Singh, CA, FAIA

Jun 4, 2021 09:27

Do you run a small business in India? Are you wondering if GST applies to your business or not? We are here to solve your queries and apprehensions. GST or Goods and Service Tax is a comprehensive indirect tax system that the central and state governments levy in India according to the GST Act, 2017. As per the estimations for 2020, more than 1.2 crore entities have a GST registration under the Act.

You must have seen that the businesses which register themselves for GST get a unique identification number known as the Goods and Service Tax Identification Number (GSTIN). This ID helps the government keep a record of all the GST payments and returns submitted on behalf of a given business. GST has simplified the tax return payment process to a great extent. A business entity that is liable for registering under GST guidelines must obtain the same. However, there are GST exemptions for small businesses in India.

Who has to get a GST registration?

The business entities that fall under the following turnover criteria have to get a GST registration.

  • For entities in the manufacturing sector, those who have a turnover of more than Rs. 40 lakhs per year.
  • For the businesses in the service sector, the entities have an annual turnover exceeding Rs. 20 lakhs.
  • For the business ventures located in the Special Category States of India, the turnover limit is Rs. 10 lakhs per year.

If your company falls under any of these categories, you must get yourself registered under GST Act, 2017. Apart from the above-stated three prerequisites, there are also other conditions that one must consider for determining if they need to get a GST registration or not.

  • If your business is supplying goods from one state to the other, then you need to register under GST.
  • If you are using online e-commerce aggregators such as Amazon or Flipkart or supply goods through such online aggregators.
  • If your business deals in import or export of goods.
  • If you are liable to pay GST according to the Reverse Charge Mechanism.
  • If you are a Casual Taxable Person or a Non-resident taxable person
  • If you act as an Input Service Distributor

Even if your business does not attract any of the above regulatory conditions, you can obtain a voluntary GST registration for your business. An entity obtains a GST registration under the regular scheme or makes use of the Composition Scheme if it is eligible for the same. There are specific turnover limits for business enterprises that want to get GST registration under the Composition Scheme. Presently, for businesses located in states other than special category states, the turnover limit is Rs. 1.5 Crores.

What are the pros of GST implementation in India?

* The ease of starting a business:

Earlier, to register a business, a VAT or CST registration was essential. The VAT laws would vary for each of the different states in India. Thus for the business enterprises with inter-state dealings, it was difficult for them to register and carry out the general tax payments. However, post the implementation of the GST Act in 2017, the registration and tax return filing procedure has become centralized and standardized. It has led to an increase in inter-state business and easier tax return payment.

* Integration of numerous taxes into one:

Previously, the centre and the state governments would impose various taxes differently for different businesses. However, after GST, many taxes have been subsumed under one tax, that is the GST.

* GST exemption of small businesses and startups

The VAT registration for different states was different depending upon the turnover of the business; in some states, it was applicable from Rs. 5 lakhs, while in some, it was from Rs. 10 lakhs. This created lots of complexities and confusion for all the businesses. With GST, the companies with annual turnover below 20 lakhs need not register themselves under GST. They are exempted from paying the GST. Small businesses are at an advantage with this law.

* Improved transparency by supervising future complications

GST provides transparency, ensuring that the taxpayers do not indulge in malpractices such as corruption, tax avoidance, frauds, and pestering of taxpayers by the authorities. GST has replaced a complex indirect tax system into a simple yet effective techno- driven way of taxes. This has led to simplicity of payment for the taxpayers and abundant revenue generation for the government.

* Removal of Cascading impact of taxes

The tax payable as the GST Act uses the "Ad Valorem" basis for taxing business entities. Thus, all the intermediaries involved can use credit for the portion of the tax, which is already paid only to pay the net liability between the seller and final consumer. Thus, there is no cascading tax levy.

How to get a GST registration?

One can obtain a GST registration by making an online application on the GST portal. However, if you are confused about the process for registration, you can find some assistance. Hiring professionals such as a CA or CS for registering your venture under the GST is a good choice. You can search for online help for your GST registration needs from the comforts of your home. Gotaxfile can offer you robust assistance at an economical price to sort out your registration process.

Depending on the type of business entity, one must submit copies of certain documents with the relevant GST authorities. PAN, Aadhar Card, bank statements, photos of proprietor/partners/directors, proof of address for the given business premise are among the records commonly needed for the registration process.

What are the benefits of GST registration for businesses in India?

  • Even if there is a GST exemption for small businesses in India, one can gain some promising merits with GST registration.
  • Getting GST registration allows you to enjoy input tax credit and pass on the credit to your customers.
  • If you are a business registered under GST, it will enable increasing your business venture's credibility and accountability. Most B2B entities prefer to trade with ventures who are registered under the GST Act.
  • You can enjoy the numerous advantages available with the implementation of the GST Act, 2017.
  • Business entities that have GST registration find it easier to avail of loans and get government incentives.
  • It promotes the easier movement of goods across the various states in the country. Thus, if you plan to expand your business reach, having a GST registration can prove quite handy.

Hassle-free GST registration with Gotaxfile!

Gotaxfile is one of the emerging tax and accounting firms that is all set to ease legal compliance, such as GST for businesses across India. We have a lucid and highly interactive portal for entities to enable to derive required assistance for their tax, accounting, or secretarial demands. We have the technological proficiency and technical knowledge to help you in complex domains such as the GST. From registration to return filing under GST Act, 2017, Gotaxfile can seamlessly carry out these compliances in a very cost-efficient manner. Take your small business venture towards a larger scale. Accelerate with the Gotaxfile team! Contact now!

Rajiv Singh
Rajiv Singh, CA, FAIA

Jun 4, 2021 09:27

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