Important GST Information That Every Entrepreneur Should Know
Goods and Services Taxes (GST) are a ‘One Nation One Tax’ regime that was established to eliminate the cascading effect of 13 other indirect taxes like service tax, VAT, etc.
Businesses should have complete information about GST rules and regulations to maintain GST compliance and be well-informed about the legal aspects, exemptions, and penalties related to GST. This post explores eight features and facts about GST in business that every entrepreneur should know and follow.
8 GST Facts that Businesses Should Be Aware About
Here is some important information related to Goods and Services Tax (GST) in India that every business should have:
- Impact of GST on Industry and Inflation
It is forecasted that India shall witness GDP growth of 6.0 per cent to 6.8 per cent in 2023-24. A gross GST revenue of Rs. 1,61,497 crore has been reported for June 2023, which has led to a 12% Year-on-Year growth.
GST taxation has transparency and streamlined effectiveness, which helps businesses function more efficiently. With the application of GST on all goods and services and digital measures to all GST tasks, it has become easy for entrepreneurs to pay taxes. The initial application of GST brought inflation low; however, after appropriate control measures were taken, inflation was well-managed, and economic growth is expected to increase year on year, which will benefit all stakeholders involved.
- Importance of GST Registration
GST registration is mandatory for eligible businesses. Start by registering online and getting your GST Number, which will help you fulfil formalities like tax credits, paperwork, invoicing, exemptions, etc. Businesses can easily meet GST obligations with the GST number’s help.
- The Rate of Tax on Goods/Services
Different products are grouped in GST based on their assigned HSN code – Harmonised System of Nomenclature and services under the SAC code – Service Accounting Code. It is important for businesses to know the different GST rates applied to different goods and services and prepare tax invoices accordingly.
- Different Types of GST
GST can be of different types:
- CGST is the tax collected on an intra-state sale by the central government
- SGST is the tax collected on an intra-state sale by the state government
- IGST is the tax collected on an inter-state sale by the central government
- UTGST is applicable in the Union Territories
- GST Records and Filing for GST Returns Online
Entrepreneurs are required to remain compliant with tracking GST and filing returns efficiently. You can:
- Use accounting software to track GST
- Remain consistent and up-to-date
- Track sales and purchases and GST-eligible supplies
- File GST returns on time and accurately
- Make GST payments one-time
By following the above-compliant rules, your business can avoid penalties and fines, follow compliance, and maintain the profitability of your organisation.
- Understanding GST Exemptions
Businesses must understand GST exemptions to make money, save costs, and enhance profit margins. GST exemptions are first applied to businesses with a turnover of less than Rs. 20 lakhs (goods) and Rs. 40 lakhs (services). Moreover, GST is exempted on goods like religious services, medical services, milk, bread, and eggs. GST exemptions can help you save money and focus on building profits.
- Understanding GST Penalties
It is imperative to stay compliant on GST payments, file GST returns, and follow GST rules according to the given deadlines; it may draw penalties like high interest amounts and fines. Businesses must follow the processes prudently, adhere to the GST rules and regulations, respect the deadlines, and stay compliant to avoid financial penalties.
- Understanding the Composition Scheme
This a benefit for small businesses under which they need to pay GST tax at 1% to 6%, provided their annual turnover is less than Rs. 1.5 crores in the previous financial year. This is an advantage need to apply for online. There are special category states in India where there is an added limitation of Rs. 75 Lakhs on this Rs. 1.5 Crore cap.
Conclusion
Businesses have had a tough time catering to the many indirect tax regimes initiated by the central and state governments of the country in the past. As a result, it led to situations like undue stress in the business environment, tax evasion, bankruptcy, and non-compliance with the taxation system. With the introduction of GST, businesses are happy to cater to one tax system and are diligently paying their dues.
This has led to a more streamlined tax system that is convenient for the government, business entities, and end-consumers. Moreover, digitalisation and 100% compliance with GST regimes have eased how businesses function in the current scenario. Thus, entrepreneurs need to understand the nitty-gritty of GST and follow the system with integrity and diligence.
