Simplifying GST: Tips for Small Business Owners

In India, introducing the Goods and Services Tax (GST) has altered the business climate significantly, and as a consequence, start-ups have been affected significantly. This new fiscal policy has unified all others that were being applied before on various transactions under a single taxation framework hence, it is now possible not to charge twice, as GST was earlier implemented by different states or union territories separately. It stands true to its tagline, “One Nation One Tax”, to streamline compliance processes for small business owners and established businesses. Read this post to learn about tips for small business owners in India. 

GST Payment Tips for Small Business Owners

Paying GST can seem tricky, but small business owners can streamline the process and ensure timely and accurate GST pay with helpful tips. Here’s how:

• Understand Your Threshold: Not all businesses need to register for GST. You’re exempted if your annual turnover is below Rs. 40 Lakh (Rs. 20 Lakh for services). However, registering for GST even below the threshold can give you access to the Input Tax Credit (ITC), reducing your overall tax burden.
• Embrace Online Filing: The entire GST ecosystem operates online through the GSTN portal. This allows for convenient registration, return filing, and, most importantly, easy GST payment. Use the portal to make timely payments using online net banking or credit/debit cards.
• Maintain Accurate Records: Meticulous record-keeping is crucial for smooth GST payment calculations. Maintain separate accounts for purchases (with GST paid) and sales (with GST collected). This will simplify claiming ITC and calculating the final GST amount payable.
• Consider the Composition Scheme: If your turnover is below Rs. 1.5 Crore, you can opt for the Composition Scheme. This simplified scheme offers a lower tax rate and requires fewer return filings, making GST payments less stressful.
• Stay Updated on Changes: Ensure your transactions are GST-ready by staying informed about any changes that could affect the rates, filing deadlines, etc.
• Seek Professional Help: If the thought of navigating the intricacies of GST seems daunting, one option to consider is seeking advice from a Chartered Accountant or a Tax Advisor. This way, you will be shown the best way of paying the tax, ensuring you fulfil all requirements and pay less tax.

Things to Remember For Small Business Owners 

GST is a single tax levied on the supply of goods and services across India. Here’s a breakdown of certain things that must be noted when working with GST:

• One Nation, One Tax: GST replaces multiple indirect taxes, creating a unified tax system throughout the country.
• Value-Added Tax: Tax is applied only on the value added at each stage of production or distribution, eliminating cascading taxes.
• Destination-Based: The final consumer in the supply chain pays the GST, not the seller in each state.
• Multiple GST Rates: Different tax rates (such as 5%, 12%, 18%, and 28%) apply to various goods and services. Some are exempt.
• Benefits: Aim to simplify tax compliance, reduce transaction costs, and boost economic growth.

What is the Threshold For GST Registration?

Before introducing the Goods and Services Tax (GST), businesses that generated over Rs. 5 Lakh in revenue within a fiscal year had to register as VAT.

Businesses providing services and having an annual turnover of more than Rs. 20 Lakh (Rs. 10 Lakh for the States of Manipur, Mizoram, Nagaland, and Tripura) must register for GST. 

Similarly, any businesses that are suppliers of goods with an annual turnover exceeding Rs. 40 Lakh (Rs. 20 Lakh in the States of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura, and Uttarakhand) must also register for GST.

Under GST, a composition scheme has been made available to Indian small businesses. Under this scheme, businesses with annual sales up to Rs. 1.5 Crore will pay less in taxes.

Conclusion

Simplifying GST processes can significantly benefit small business owners by enhancing efficiency and compliance. Small businesses can streamline their operations and avoid common pitfalls by understanding the basic requirements, maintaining accurate records, and utilising available digital tools. Regularly updating knowledge about GST regulations and seeking professional advice are crucial steps. Ultimately, the key to success lies in the consistent and timely effort to pay GST, ensuring businesses remain compliant and focused on growth.