How is GST helpful for small business and traders

Sat Dec 18, 2021

The introduction of GST 0in India was seen from various perspectives. So, are you here wondering if GST is beneficial for your small business? We're here to answer just that!

GST also holds great promise for taxpayers in terms of streamlining their company and accounting operations and maximizing tax benefits. The sole exception is that enterprises must be prompt and exact in following the GST Council's processes.

This article will give you more than you’re here for. Read on to know the in-depth filling on how GST will benefit your small business and you as a trader

TABLE OF CONTENTS

1.What is GST?

2.GST: A Boon for Small Business and Traders

3.Do Bloggers and YouTubers Fit Into GST?

4.FAQs

5.Summing Up

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What is GST?

The Products and Services Tax (GST) is a consumption-based tax on goods and services, which means that GST is collected by the state in which the goods or services are used.

GST will be imposed from the point of manufacturing to the point of final consumption. The GST credit would be available for set-off.

The tax levied by the center on intra-State supply of goods and/or services is known as Central GST (CGST), whereas the tax levied by the state/UT is known as state GST (SGST)/ UTGST.

In the case of an interstate supply of goods and services, the Centre would levy a tax known as Integrated GST (IGST).

Registering for GST

Every individual who is required to get a Registration must do so separately for each state in which he runs a business and is required to pay GST.

Registration under (GST) provides several advantages for businesses:

Registration allows a taxable person to collect tax from his customers and credit the taxes paid on products or services delivered to consumers or beneficiaries.
Accounting for taxes paid on input products or services can be used to pay GST.
An unregistered person cannot collect GST from his customers or get GST input tax credits.

The General Merits of GST

One of the primary advantages of GST is that it is uniform across the country and would simplify indirect taxes.

GST is supposed to be a big relief, making it easier to conduct commerce and business regardless of national geography.

The implementation would also increase product competitiveness in both domestic and international markets. Other significant advantages of GST include:

GST would, to some extent, remove the cascading effects and offer a common national market. Consumers will benefit from a decrease in the total tax burden on products.
Transparency is hampered by the complexity of the previous indirect tax structure. Since GST is a uniform tax system, it would provide end-users with the necessary information and contribute to the creation of a transparent environment.
The previous approach includes several complexities that have a cumulative effect on the cost for the end-user. Multiple indirect taxes collected at all progressive levels of the value chain under the existing system contribute to an increase in the prices of all items.
GST is projected to reduce the total tax burden on several items, benefiting the end consumer in the long run.

Penalties for not Paying GST

An offender who fails to pay tax or makes insufficient payments must pay a penalty of 10% of the tax amount due, subject to a minimum of Rs. 10,000.

Consider this: if tax is not paid or if a payment is made in error, a minimum penalty of Rs 10,000 must be paid. The maximum penalty is 10% of the underpaid tax.

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GST: A Boon for Small Business and Traders

GST also holds great promise for taxpayers in terms of streamlining their company and accounting operations and maximizing tax benefits. The sole exception is that enterprises must be prompt and exact in following the GST Council's processes.

So, if you operate a small business or know someone who does, read on to learn more about how GST might help you.

The Advantage of Doing it All Online

GST compliance is made easier with a sophisticated online gateway for registration, payment, and submission of returns.

The site gives taxpayers the flexibility and freedom to correct and refile their taxes if they uncover any issues after filing.

The government has made steps to make tax payments easier by lowering compliance requirements for direct tax payments and shifting more crucial payments online.

Making Compliance Easier and Less Expensive

GST simplifies compliance while lowering costs a windfall for micro, small, and medium-sized businesses (MSMEs).

The GST exemption ceiling for MSMEs has been enhanced from 20 lakh to 40 lakh from 20 lakh before.

Businesses with a turnover of up to 1.5 crores also benefit from a composition plan in which they pay a fixed rate of one percent and file only one yearly report. Service providers having a turnover of up to 50 lakh rupees can pay GST at a rate of 6% rather than 18%.

These business-friendly policies would benefit over 35 lakh businesses. In addition, the government worked on a plan to allow more than 90% of GST payers to file quarterly reports.

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A Strong Auditing System

The GST policy emphasizes the importance of a robust audit framework for verifying and evaluating taxpayer compliance. It encourages people to self-assess their tax burden and pay their taxes without the involvement of the Income Tax department.

Every GST registered taxable organization with a turnover of more than 2 crores in a fiscal year is required to have its books audited by a CA or cost accountant.

This audit will verify the accuracy of the taxpayer's information, taxes paid, refund claimed, and input tax credit (ITC).

Ease of Conducting Business

The Goods and Services Tax (GST) has been a driving force in streamlining India's indirect tax structure.

While removing the tax's cascading impact, GST eliminated various pre-existing taxes such as Central Excise Duty, Service Tax, Countervailing Duty, Value Added Tax or Sales Tax, Central Sales Tax, Octroi and Entry Tax, and so on.

As a result, it has made conducting business easier for everyone. Furthermore, as returns are filed online and interstate transportation of goods and services has gotten more efficient, it has become more streamlined and trouble-free.

Taxes for entering neighboring states, checkpoints, and traffic line-ups are all stuff of the past. Standardized tax systems across states and union territories have reduced compliance costs and eliminated several levies.

The GST rates on products and services have been divided into five categories: 0%, 5%, 12%, 18%, and 28%. These were calculated using the pre-GST aggregate indirect tax incidence of both Central and State taxes, including embedded taxes, which are integrated into GST to guarantee revenue neutrality.

Since there are no various taxes imposed by multiple governmental entities, some of which are even enforced at the local level, the accuracy of data provided for returns has vastly improved.

Better Transparency with Prospective Difficulties Addressed

By assuring transparency, the GST system has cleared the path for the reduction of fraud, tax evasion, taxpayer harassment, and corruption.

It has replaced a multidimensional, complex indirect tax system with a straightforward, transparent, and technology-focused tax structure that leaves no opportunity for ambiguity. As a result, the taxpayer's burden is reduced, while the government's revenue is enhanced.

Access to Markets Throughout India

Since the new GST system has eliminated the various taxes that apply when doing business in different states, it has eliminated the tax-related headaches and complications that enterprises with an all-India footprint had to deal with.

With GST, businesses now have simple access and the flexibility to conduct business in any place in India without concern about paying various taxes or navigating complicated transaction processes.

ITC Viability is Seamless and Universal

New GST laws have created the ground for a systematic approach to offer ITC between excise duty and service taxes. This guarantees a more robust system for crediting input taxes levied on outputs.

Previously, the central excise tax was charged throughout the production process, which was included in the final retail price. The state VAT was also collected on the value of the excise charge paid.

Do Bloggers and YouTubers Fit Into GST?

GST has a distinct impact on each industry. People took a long time to grasp the application and impact of GST on their company and professional practices.

Under the GST Bill, YouTubers and bloggers reflect the service-induced tax burden. A blogger is regarded as a service provider. Bloggers provide advertisers a place to display their advertisements. As a result, a provision of service is signified.

Bloggers and Youtubers with GST Registration

Although bloggers, YouTubers, and other freelancers are required to register for GST, not everyone is required to do so. The quantity of money earned by such specialists, as well as the region of supply and interstate transactions, serve as decision factors.

FAQs

How has the Goods and Services Tax (GST) affected small businesses?

Many firms are relieved of this burden under GST because they are not required to register or pay if their annual revenue is less than Rs. 20 lakh (Rs.50 lakh will pay GST at a reduced rate). This should benefit start-ups and other small firms by easing them of tax obligations.

Is GST helpful to both customers and businesses?

A: GST decreases taxation on taxation and indirect taxation. It eliminates many compliances such as VAT, service tax, and so on, enhancing the outflow.

With GST, the outflow has been substantially curbed, hence eliminating the taxing cascading impact.

What is the significance of GST in the business world?

GST will make it easier to do business in India.

This complicates matters for the firm since they must compute taxes on the transaction based on different rates for different goods. The difference between Goods and Services will be eliminated with the implementation of GST, making compliance easier.

Is the Goods and Services Tax (GST) relevant to small businesses?

Businesses and individuals are free from GST if their yearly aggregate turnover falls below a certain threshold. Businesses/individuals having an annual aggregate revenue of less than Rs. 20 lakhs were exempt from GST at the time of its introduction in July 2017.

Is it possible to get the GST penalty waived?

The Ministry of Finance has extended the deadline for availing of the late fee amnesty plan under the Goods and Services Act (GST) to November 30, 2021.

The late fee amnesty plan refers to a reduction or remission of the late charge for failing to file Form GSTR-3B for the tax years July 2017 to April 2021.

Summing Up

While GST provides a variety of benefits, its entire worth may be realized when businesses engage in IT solutions for total business process automation.

If you own a small business, GST may more beneficial than you think!

There are a few solid GST-compliant software systems available today that automate the accounting, billing, and GSTR filing processes for a business in less than three minutes. Read our blog (add the link here) to know which software is best for you.

If you found this blog useful, please share it with your colleagues and let us know what you think in the comments section below.

Letstute
Letstute (Universal Learning Aid Pvt. Ltd.) is an E-learning company based in Mumbai, India.

How is GST helpful for small business and traders