GST for SME’s had been introduced to make indirect tax administration much more hassle-free. But, instead, it seems to have caused much chaos in the country. In fact, there have been many GST misconceptions running in traders minds, causing confusion & fear among them.
Well if you’re a trader or planning to become one, Consider reading these to feel like being on top of the world:
# Starting a Business gets within your reach after GST
Firstly, it’s the right time of the year to become a Boss. Previously, a new business needed a VAT registration under Sales Tax department and had a lot of issues with different procedures and fee in different states during business expansion. Presently, after GST, there has been uniformity in the process through centralized registration. This, in turn, has made starting a business or expanding one in different states much simpler. In other words, zero complications of different indirect tax rules across states tempt you to go for it.
# Small Traders become Small Taxpayers under GST
Previously, businesses with a turnover of over 5 lakh rupees (10 lakh in some states) had to pay a VAT registration fee. After GST, the central government has increased the basic exemption limit to 20 lakhs, which is a 75 percent relaxation in the limit for small traders and manufacturers. Small Business, Big advantages.
# Speed delivery of your Goods/Services
GST rules will boost commerce all across the country as there’s no Entry Tax at check posts anymore. Consequently, this results in faster movement of goods at interstate borders. As per an estimation by the CRISIL, the cost of logistics for the manufacturers of bulk goods will significantly reduce by 20 percent.
# Lesser Ambiguity between Products and Services
Previously, products and services attract a different tax rate, Goods attract VAT and services attract service tax. There was no clear distinction between product and service. For eg., A Restaurant can be a product or even a service-based which leads to confusion during tax charge. In GST scenario, there will no longer be a distinction between the material and the service component, which will greatly reduce tax evasion. In some cases, there is a distinction between goods and services when they are sold as a package. These controversies will go.
# Reduction of taxes on Manufacturers and Consumers
The manufacturer will get the input tax credit that can be claimed to settle the tax liability. The Consumer will have to pay only the tax charged by the last dealer or the retailer in the supply chain. This, in turn, results in the fall of tax rates for most of the goods causing relief to consumers. To sum up, cost of products and services is cheaper for the consumer.
The Final Word
But it is also important to realize that every advantage has its own disadvantage. In contrast, GST for SME’s need not have a negative impact, whereas the burden of more compliance increases if unprepared.
- Firstly, Managing ambiguity might become the biggest challenge.
- Moving from current tax era to GST would be a period of pain and inconveniences if SME’s aren’t embracing technology and processes in their accounting work.
- This would require SME companies to have an accounting software system for billing and filing.
- Fortunately, there is Accounting & Billing software like VYAPAR, which is GST ready. For SMEs, using such accounting software could be a good starting point.
- With few steps, business accounting gets GST compliant on the go without fundamentally shifting in how books are maintained.
- Using such Billing software results in a reduction in paperwork and time wasted in paying taxes and helps you to keep a record of GST.