Small or big, your business needs GST!
GST or the Goods and Services Tax in India was implemented in India during 2017 to exclude indirect taxations. A combined tax system that has replaced all secondary and additional expenses levied by the Central & State governments of India.
Even though the GST system has been adopted by most small & big businesses in India, there are certain criteria one needs to meet to be eligible for registering under it. They are:
- If you supply to eCommerce businesses like- Amazon, Flipkart, Myntra
- If your annual turnover is above 20 Lakh rupees.
- Registered under VAT via previous law.
- Conduct interstate sales.
- Paid charges under Reverse Charge Mechanisms.
- If you have a running business Website.
- Associated with service aggregators like- Meru, Ola, or Uber.
- If you are self-employed & casually taxable.
- Final Product Producer.
- Non-Resident with no business place.
Becoming a registered member of GST comes with its perks like- less professional procedure fees, zero complications of interstate indirect taxes, faster delivery of goods, and small traders will become official tax paying businesses. Let's explore in brief about everything an entrepreneur must need to know about the latest updates and trends that have been implemented on GST India.
Competing on Global Levels
After subsuming 17 indirect taxes levied by the government, the GST will give you the freedom and flexibility to compete with international allies. The Indian market becoming competitive in global markets will take us one more step forward from being developing to a developed country.
GST ensures the least cascading of taxes, hence, making it an anti-inflationary program. This law will also reduce any unwanted or additional costs of doing business. The best part is no trader has to pay any taxes in advance before supply.
Doing Business has become Easier
The uniformity of the tax rate structures across the states and union territories reduces a lot of indirect taxes and additional compliance costing. The GST has fixed slabs under which the taxes are added- zero, 5%, 12%, 18%, and 28%.
Numerous check posts across the country were eliminated after the implementation of GST. This ensured a faster movement of goods and commodities.
Scheme of Composition
This scheme has made the taxation process even simpler whilst also cutting down compliance costs for small businesses. The traders having turnovers above 20 lakhs will pay a 1% flat rate and file an individual annual return.
While the small businessmen or traders with lower turnovers have to just pay 6% of GST instead of 18% like before. This will allow them to operate and run much easily on multiple platforms.
Every process regarding GST happens online. Visit the portals and filling up your details via registration will make you an active taxpayer of the country. From tax payments to filing returns, every process has been set up online to avoid the paperwork. This was also done in the interest to promote the Digital India campaign and introduce more people to paperless transactions and registration systems.
There are over 13 million GST payers in the country, which includes B2B & B2C sectors. With the arrival of GST, the need for accounting software arose, and also a new section developed: GST accounting mobile applications to target the increasing mobile users. Since smartphones have become an ultimate need for all generations, people consider getting most of their work done via the help of a click.
Keeping in mind the habits of businessmen and retailers, they have launched their official application that can be downloaded via- their website, Google Play Store, & iOS. Many small-town merchants still use the pen and paper method to keep track of everything, hence, missing or leaving out important transactions, GST has eliminated this messy procedure as well.
The reasons why the government urges small businesses to use online methods to pay GST are-
- Lesser time consumption
- Custom & User friendly
- Automated tax report generation
- Easier to keep records
- Audiovisual aids
- HSC & SAC codes available( needed for filing tax returns)
- Regular updates
If you are selling books and nothing else to eCommerce websites, the GST won't be compulsory for you, but other than that it is essential. With bigger companies, or businesses they hire accountants to take care of transactions and taxes, but small-town retailers should not turn a blind eye to this process. GST for small businesses is beneficial in the longer run.
The most important part about GST is that- it's directly contributing to developing India's economy. The taxes you pay via GST will be used for infrastructure, construction of better roads, that'll ensure speedier delivery of goods to your shops.
UPDATES EVERY BUSINESS SHOULD KNOW ABOUT GST
- GST Registration is mandatory if your business supply exceeds- Rs. 40 lakh (for goods supply) and Rs. 20 lakh( for service supply).
- Understanding the HSN (Harmonious System of Nomenclature) & SAC(Service Accounting Code) code for identifying the rates of tax that will be done via the website.
- The GST is compulsory to be added in every invoice that includes- CGST, SGST, & IGST.
- GSTN number has to be provided for every purchase to claim ITC (Input tax credit).
- Most businesses have to pay and file a return of taxes monthly depending on your annual turnovers.
These rules will help in the correction of disorganised business sectors of the society. The regulation and transparency provided by GST don't exclude any business from the important fundamentals. More and more small businesses will benefit from lower compliance costings by using the composition scheme and make the market easily approachable for budding entrepreneurs.