What are the GST guidelines for small businesses?

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Starting a new start-up or already having a pre-establish business, there are many things that you need to understand and manage for your business. From managing the stocks to maintaining the financial accounts there are many things that you might have to take care of. One such thing is the GST taxation system, but the question that remains in mind for small business owners is that do they really need GST services for their start-ups and small businesses. As per the act GST Act, if your financial turnover is above RS.40 lakhs, then you need to register under GST. For northeastern and hill states, the limit is Rs 10 lakhs.

What is the GST?

GST refers to the goods and Services Tax. It is an indirect tax that is levied on goods as well as services. All existing states and central indirect taxes are submitted under the GST. It is applicable throughout the country; therefore, it is also referred to as the “One Nation One Tax”.  If you are also running a small business then you can avail CA for small business  services.

The implementation of the Goods and Services Tax (GST) in India has vastly impacted the way start-up’s function. GST has abolished certain indirect taxes and clubbed everything under its own larger umbrella.

GST could be a mixed bag for small and medium enterprises in India in the short term. However, in the longer term, the impact is likely to be a lot more positive and value accretive. The SME segment in India contributes to nearly 40% of the exports and nearly 70% of the total employment generated. The most enduring image of the post-GST scenario has been the large number of traders and small businessmen who have been protesting against the GST across India. Their concerns are not entirely misplaced. GST will result in a sharp increase in compliance requirements and will also bring a lot of untaxed entities into the taxation fold. 


So, on a broader basis GST can be considered as the new taxation system introduced in our country as it will help the tax-payer as well as the government to regulate the finances and economy of our county. If you also want guidance and help for filing your tax and maintaining your finances for your small business and start-up, you can avail best CA for TAX services available online.

Let us understand GST with an example: –

A farmer sells potato to a chips company, who processes it to create various flavours of chips, pack it and sell it to the several retail stores.

The farmer sold the potato  at Rs.10. If the GST rate is 10%, then the added tax will be Rs.1, so the chips manufacturer will purchase potatoes for Rs.11 (10 + GST 10%). After making the chips, he adds Rs.10 as his margin. According to GST, the manufacturer will now apply tax only to the value addition of Rs.10 (adding another Rs.1), instead of applying it to the total value of Rs.21 (Rs.11 + Rs.10). So, the manufacturer sells his ice cream to a retailer for Rs. 22 (Rs.11 + Rs.11). The retailer then adds a value of Rs. 10, and GST of 10% (Rs.1) is applied to that value addition, which makes the total cost of the chips Rs.33 (Rs.22 + Rs. 11) for the end consumer.

Note: The GST rate is yet to be determined. Experts and tax analysts predict the GST rate will be somewhere between 18-20%. Members of the Parliament have proposed an 18% cap on the GST to reduce tax burden.

Are there any exceptions to the GST taxation system?

It is a fact to be noted that business turnovers with a revenue more than 20 lakhs and above will have to register and file the GST returns, with a threshold of 10 lakhs including the business in the north east hill states. So, if your company makes less than 20 lakh or 10 lakhs and if you operate in the NE of India, then you will not have to register for GST however it will be important for any business irrespective of their turnovers to pay their tax and maintain a proper financial record. 


How is the GST taxation system different from the current taxation system? What are the changes that we need to know about?

Currently, there are many indirect taxes being applied on goods and services in India. To simplify the collection of these taxes and makes the process more transparent, GST will replace all of these taxes with a single unified tax applied to value addition instead of the total value of the product at each stage in the supply chain.

The central TAX that GST replaces are: –

  • Service tax
  • Additional excise duties
  • Medical and toiletries preparation excise duty.
  • Special additional duty of custom.
  • Surcharges.
  • Cesses.
  • Central excise duty.

The state taxes that GST replaces are.

  • VAT/ sales TAX
  • Entertainment TAX (unless it is levies by the local bodies)
  • Luxury Tax
  • Taxes on lottery, betting and gambling.
  • State cesses and surcharges that are released to the supply of goods and services.

CGST and SGST will be applied to all transactions, apart from exempted goods and transactions below the agreed threshold limit. They will be paid separately, to the Central and State accounts and tax returns will be filed with the appropriate CGST and SGST authorities.

Dealers and manufacturers who pay CGST or SGST will be given input tax credits (ITC), meaning they receive credit for the taxes they paid on their purchases. The credits of the CGST can only be used for the CGST paid. The same is applied in the case of SGST. 

If you also want to understand the GST taxation system better and benefit from its business for your business you can avail CA for Business services in order to grow your business exponentially.  

How can you register your small business and star-ups for GST?

Eligibility for GST registration: –

Before applying for the registration of your start-up or small for the GST taxation there is certain eligibility criteria that you should consider. For the sector including the manufacturing of the products and services, the financial turnover is Rs 40 lakhs or more. For the service provider sector, the financial turnover is Rs 20 lakhs or more. In North-eastern and hill states, Rs 10 lakhs or more is required.


Other basic requirements for GST registration: –

A small business owner is eligible for GSTIN under these guidelines: –

  • You are located in one state but selling goods or services in another state.
  • If you are using e-commerce platforms like Flipkart or Amazon to sell your products.
  • Your business involves the export and import of things.
  • If you are generating tax invoices for your customers.
  • For the reverse charge mechanism, you are eligible for tax.
  • In case you work on behalf of the registered taxpayer.
  • Working as an Input service provider (ISD).
  • If your company involves as a Casual Taxable Payer in any event outside your residing state.
  • Operating an e-commerce site or have an aggregator business (one who supplies service under his brand name).
  • You are providing overseas OIDAR (Online Information Database Access and Retrieval) service to India.

If you want help and guidance for eligibility for GSTIN number for your business you can avail CA for business service.

Steps to register your business for GST.

Step 1:- 

For the starting you have to visit the gov website for the GST taxation registration. There you will need to fill your business details such as the information about your business like the name of the business, type of entity, district and share where the business is located, date when the business started, etc. it is mandatory for all to fill this section.

Step 2:-
 first you will have to fill part A. select the “new registration” and fill the details by selecting your identity as the “taxpayer”, then choose for your state and district from the given options. Write the name of your business as mentioned on the PAN card, then fill for the PAN card number of your business/proprietors PAN number. Add your Email address and mobile number and proceed for OTP verification and complete it.

Step 3: –

After completing your OPT verification would then need to provide the details of the person who will be signing (through DSC or EVC) the registration form and the GST returns as Authorized Signatory of the business. It is mandatory to fill this section.

Step 4: – 

Principal place of business – Principal place of business is the primary location of the business. An office can be identified as the principal place of business if the financial statements of the business are kept at that office or if the top-management of the business is located at that office. Here you need to provide details like address, nature of possession of the premises etc

Step 6: – 

Additional place of business – If the business has more than one office, then here you need to provide its details.

Step 7: –

Goods and Services – Here you need to mention the goods that you supply and its HSN code or the services that you offer and its service classification code.

Step 8: – 

In the last section of the form you need to verify the details of the form and submit the form for further processing. The verification can be done either by using a DSC or EVC. For business types other than Proprietorship concern i.e., Company, LLP, Partnership Firm, using Digital Signature Certificate (DSC) for verification is mandatory. For Proprietorship concern, the proprietor can use EVC for verification i.e., the form can be verified using proprietors Aadhaar number.

Step 9: – 

In the last section of the form, you need to verify the details of the form and submit the form for further processing. The verification can be done either by using a DSC or EVC. For business types other than Proprietorship concern i.e., Company, LLP, Partnership Firm, using Digital Signature Certificate (DSC) for verification is mandatory.  For Proprietorship concern, the proprietor can use EVC for verification i.e., the form can be verified using proprietors Aadhaar number.

List of the documents required for GST registration: –

  • Photograph of the applicant
  • ID proof (any two)

(a)Election ID card

(B)Aadhar card


(d)PAN card (compulsory)

  • Constitution document:

(a)Company (private Ltd/OPC, public company): certificate of Incorporation.

(b)partnership firm: partnership deed, certificate of Incorporation in case of LLP.

(c)Proprietor: Shop Act Registration/intimation.

  • Proof of principal place of business.

(a)Owned: Property Tax paid receipt, light bills, Sale deed, Index II (Any one)

(b)Rented: Registered Rent Agreement, light Bill.

  • Bank account of business (Any one)

(a) cancelled cheque

(b)Copy of bank statement

(c)first page of pass Book

  • Address Proof of Residence (Any one)

(a)Light bill

(b)Telephone bill

(c)Property Tax paid receipt

  • Digital signature, if available.

CA for Tax and CA for small business services will not only help you to maintain your business finances but will also help you to maintain the GST Taxation records for your business. 

Benefits of registration under GST for small business.

if you are running a small business for starting a new business or a start-up, registering for GST will provide you immense benefits in the long run, some of them are discussed below: –

  1. GST has explicit provisions on the inter-state movement of goods for e-commerce brands.
  2. Composition Scheme, a simple and easy scheme for small taxpayers. The scheme comes under GST for taxpayers. It reduces tedious GST formalities and pays GST at a fixed rate of turnover. It is ideal for any taxpayer whose turnover exceeds less than a crore.
  3. As per GST council guidelines, only one return can be filed under GST. Hence there is fewer compliance you need to follow to claim services tax GST.
  4. The sales tax paid to the Government can come down. You only need to pay for the added value done by your business.
  5. The GSTIN is basically a symbol of validity. It helps to give you identity for your clients, e-commerce platforms, government tenders, banks and financial institutions, MNCs, and more.

Winding up…

It will be very beneficial for your business if you understand and incorporate GST taxation in our business.

GST registration is the first step to manage your company taxes efficiently while maintaining a clean record. Faidepro assists all its customers in convenient, transparent, and hassle-free procedures. You can avail best CA for TAX and CA for business services from FAIDEPRO.

Read This Blog: Things you should know before filing the monthly GST returns

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