5 basic pointers may bother a small business owner, self-employed individual or an entrepreneur regarding replacing the indirect taxation system with GST. Factoring in these points will prepare a business owner to change his business structure for the new tax regime.
Therefore, by referring to the following sections, one will know whether to opt for a GST login or not.
5 basics to change your business for GST in 2021
1. Who needs GST registration?
Individuals selling goods or providing services must register under GST if their business turnover exceeds Rs.20 lakh. In addition, any business making intra-state supply or supply through e-commerce needs to register for GST mandatorily.
Also, no threshold limit is applicable in these cases. Therefore, this is the basic point existing taxpayers must consider before changing their business for GST.
2. What are the benefits to obtain by registering under GST?
GST registration allows businesses to obtain an input tax credit. This means that while paying taxes accumulated during sales, one can reduce the amount of payable GST on inputs that are used in a business.
In case one chooses to unregister, the businesses to which they supply must do compliance on their behalf. Hence, GST registered suppliers stand a better chance of sustaining their businesses as buyers prefer them rather than unregistered suppliers. Therefore, SMEs need to know about GST benefits before making changes in their business.
3. How to register for GST?
Existing businesses need to migrate to GST by following the given steps:
Step 1: Obtain a provisional ID and password allotted by the CBEC or State Commercial Tax Departments.
Step 2: Use these credentials for GST login.
Step 3: Next, fill out the form and submit form 20 by attaching the necessary documents.
Step 4: After successful registration, businesses that previously functioned under the traditional tax system will receive a provisional registration certificate that is valid for 6 months.
4. Is the process of GST return filing complicated?
Businesses must opt for a paperless GST compliance process. Hence, they need to file GST return online. Thus, any business following previous tax filing procedures must change to a digital record-keeping system.
Further, invoices prepared in the format as per GST rules must be submitted to GSTN. For easy understanding, businesses can follow a step-by-step guide on the GST return filing process. Additionally, all other processes like tax payment, tax credit, GST refund etc., are digitised.
5. What are the penalties for non-compliance?
Defaulting GST payments can attract a penalty of 10% on the tax amount or Rs.10,000. Further, in case of tax evasion or fraud, individuals may need to pay 100% of their due tax amount as a penalty. Therefore, businesses need to avoid non-compliances at any cost.
Also, one must go through the various ways in which GST impacts a business.
Other than this, small business owners with a turnover of less than Rs.50 lakh can choose a composition scheme under the GST regime. By choosing this scheme, entities are levied a fixed tax rate of 1%. However, they cannot claim any input tax credit.
Therefore, small business owners can secure a business loan from reputed financial institutions to reduce financial burdens. These lenders provide a high-loan amount along with pre-approved offers for a hassle-free loan application process. You can check your pre-approved offer by entering basic details like name and contact number.
However, businesses with an eligible turnover must mandatorily shift from their existing tax procedure to the new unified tax system. To do so, they must install GST software and train their employees on the new taxation system.
This will help in streamlining the entire tax process. By following the aforementioned factors, business owners can change their business towards the new tax reform. Registering under this tax regime and opting for a GST login is the first step towards this change.