Benefits of GST for Small Business

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Goods and Service Tax is one of the major tax reforms implemented across the globe, and the implementation of GST is no less than a disruption in the business. Implementation of GST lead to changes in the business process, return filing and also on business decisions. GST impact is more on the Small Businesses as now they can come into the organized sector and compete with the large taxpayers. Small Business, which have adopted and changed their business process have seen success and others are still struggling to adopt the change.

Unlike the erstwhile tax regime in Central Excise, there is no separate tax rate, they are treated as par with the large taxpayers thereby reducing the complexity for the large taxpayers and also providing a level playing field for them.

There are major impacts of GST on small businesses and also there will be challenges for them.

Benefits of GST Registration for Small Traders

  1. Small Businesses having GST Registration can claim input tax credits seamlessly and pass on the benefits to their customers.
  2. Increase in the business opportunities for small businesses as they can supply goods to the large taxpayers as they can avail input tax credit.
  3. As the small taxpayers are getting more organized, they are able to access finance through the banking channel as the banks can easily cross-check the data from the GST Returns.
  4. 4.Small Business dealing with the B2C segment can obtain registration under Composition Scheme and the threshold for the Composition taxpayers is ₹ 150 lacs currently.
  5. small businesses with an annual turnover of less than ₹ 40 lakhs are exempted from GST registration this threshold limit provides relief to small businesses.
  6. GST Registration is enabling taxpayers to manage their cash flows effectively as they can claim the input tax credit.
  7. The GST registration can also help small businesses to become more competitive.
  8. GST Registration helps the small business to make supplies across the country
  9. GST Registration helps small businesses to gain the trust and confidence of the customers
  10. Periodic filing of GST Returns helps small businesses to know their sales and purchases and keep track of the same

Also Read: Beginners Guide to GST Registration

The challenges of having GST registration for small business

  1. One of the major challenges faced by small businesses in GST is the know-how on the various provisions of GST.
  2. Availability of trained personnel with knowledge of GST to maintain the books of accounts and filing of returns
  3. Filing Returns is a major challenge as they have to file online it is a time-consuming process.
  4. for availing of the input tax credit, reconciliation is a major challenge

GST Registration is mandatory for the export of goods or services or both. Obtaining GST registration is a benefit for the small business as they can grow and at the same be part of the 5 trillion USD economy.

author avatar
CA Abishek Goli Self-employed (Partner)
CA Abishek Goli, Fellow Chartered Accountant, Partner at Manohar Chowdhry & Associates. He is having a post qualification experience of more than 12 years. He is specialized in doing Statutory Audits, Internal Audits, Tax Audits, Assessment of Internal Financial Controls and Goods and Services Tax.

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