What are the benefits of GST for small businesses
Hemlata Khandelwal / 2021-06-30 02:50:08

 GST Registration benefits for small businesses:

GST is one of the biggest tax reforms in the country. Subsumes several indirect taxes levied by the Center and states, such as excise duty, VAT, and service tax. GST was one of the many tools implemented by the government to stimulate India's economic growth.

In such a situation, keeping in mind the rules of GST, we will see here how it can benefit your small business.

Simplified Tax Filing:

GST has replaced 17 levies and multiple cesses, making the tax filing process simple and streamlined for a small businessman.

Credit Acquisition Increased:

Bank credit to MSMEs has increased by 3.7% after the implementation of GST. GST has brought transparency in accounting procedures, which has made the business cycles more flexible, thereby reducing the cost of borrowing. Additionally, the benefits of a formal economy and separation from the banking system have opened up credit lines that you can take advantage of to grow your business.

Manage the Business Better:

Before the implementation of GST, SMEs diverted a major part of their resources by tally books of accounts (a report or description of an event or experience) and tax filing. By GST, all the same, you need to examine your books regularly. Via this, a person will be capacitated to identify the stirrer-up, secure faster payments, and streamlined the person’s ledgers.

Improvement in Competition and Market Expansion:

Although GST is being viewed from an additional burden and expense perspective, GST is a common ground for all, which in the long run will provide equal competition opportunities to every trader. In the coming time, GST will create an equal playing field for you in the market. This will create an opportunity for you to compete with the larger enterprise, expand your customers and grow the business. Apart from this, you need to fill and submit an online form to get GST Identification Number (GSTIN) only once for GST. This means that if you want to take your business out, you don't have to register for VAT with each state to make business expansion easier. After introducing GST, it will be easier than before to start a business in a new state and grow it later.

Reduced Cost of Logistics:

GST is a boon for the logistics department of small businesses. GST has replaced the existing Central Sales Tax (CST) into IGST, CGST, and SGST. This means that you will not have to deal with the range and check-post taxes due to delays in inter-state transport. This will lessen your transportation cost, increase inter-state business, speed up the movement of goods, and reduce maintenance costs.

Here let's see the example to understand the GST benefits in your business.

Of a product journey before and after GST,

Before GST - When the rate of VAT was not the same for various states

It is clear from this example that the seller spends more money to pay the tax at each stage. This also makes it difficult to claim ITC (Input Tax Credit).

Assuming product A will attract 10% GST for its entire journey, post-GST implementation

From this example, after GST is implemented, one can see that there is not much difference in the amount paid by the customers but there is the unrestricted flow of ITC (Input Tax Credit) due to GST. This allows sellers, manufacturers, and traders who have a GST Registration to get the benefit of refund on ITC easily availed at the time of sale. As a small business owner, you may decide to further reduce the selling price of your product, which can give you a competitive edge in the market.

GST is expected to have a positive impact on SMEs in the times to come. By Complying with the GST Reforms, you can use this new tax regime to expand your business, digitize and become more competitive in the market. Apart from this, you can also use Mobile Apps to make GST compliant and digitize your business.

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