Why is important to have GST registered business?

Unless it is strictly required by law, enrolling in GST is difficult for the average person. In an effort to reduce costs and expenses, businesses often try to avoid paying taxes, but they frequently fail to consider the opportunity cost of doing so.

Therefore, let’s just go over the fundamentals of what GST Law is before considering whether you should register with GST for your firm. The “One Nation, One Tax” concept was the driving force for implementing the GST Act beginning in July 2017. Almost all indirect taxes were included within it.

But since the introduction of the GST, all indirect taxes have been combined into one, and buyers now only have to pay one GST tax, such as the 12 percent GST on butter or the 28 percent GST on cement.

According to the law, certain companies must register if their annual revenue exceeds a predetermined threshold, which is Rs. 40 lakhs for firms that deal only in products and Rs. 20 lakhs for those who only deal in services.

The law requires you to register if you want to conduct interstate business or sell your products or services online.

However, the question of why a small-scale firm should sign up for the Law still stands.

What advantages will it provide for the company?

Impact of Small Businesses’ GST Registration

GST has a positive impact on small enterprises, some of which are highlighted here.

• Unified tax system

Since there is no longer a distinct tax, the GST lessens the tax burden. By abandoning the tax on tax idea, the government unified all indirect taxes such as VAT, excise duty, service tax, etc., leading to more immediate cost reductions for small and medium-sized firms.

• Loan for a GST Registered Business

Holders of a GSTIN are eligible to borrow money without putting up any collateral to expand their businesses. Now that is a fantastic business financing option. One of the major advantages of having a GST registration is this — financing option via financing companies. But before you apply for any loan, we advise you to assess your company’s financial standing and your projected Equated Monthly Installments (EMIs).

• The advantage of the composite strategy

Businesses that have an annual revenue of up to 75 lakh rupees may use the composite scheme to pay tax at a flat rate of 1 percent to 5 percent. Only small firms that meet particular requirements are eligible for this programme. This maximum was previously 1.5 crores every year, however it was later lowered to 75,000.

• Inexpensive interstate transportation

Business owners don’t have to spend a ton of money transporting their goods across the border thanks to the GST in Action. Small firms can simply increase their presence without having to worry about expensive transportation costs, with better management and fewer checkpoints.

• No Cascading effect

The previous taxation structure had a huge cascading effect, so the same product is taxed at different levels of production, which leads to higher costs and lower pricing efficiency. Since GST is a value-added tax, it solved the issue because with the GST system tax is only imposed on the value addition.

Challenges Small Businesses are facing with GST

Small enterprises face two major obstacles: technical problems and working capital constraints.

• Technical problems — This is an issue for companies who lack the technological capacity to follow the online GST procedure. They must outsource it because they are unaware of the technical nuances of online GST filing. The price of filing and registering goes up.
• Blockage of working capital — While export businesses used to receive the benefit of tax exemption on the items they shipped under the old taxation system, this is not an option under the GST system. Delays in tax refunds impede business funding, which affects how well they operate. Although this is a rare issue, when it arises, firms struggle to function at maximum efficiency and must get business loans.

While business owners and organizations may have other important tasks to complete keeping their operations operating smoothly, GST Registration is just as crucial. There are more advantages available if you, as a business owner, ignore the first worry of GST registration. Your GST number will be useful for many things, such as availing business finance from the best financing companies like Oxyzo and streamlining business operations.