Impact of GST on Small Businesses in India: What You Need to Know
For every business be it small or large, GST plays a very crucial role for them to sort out payment of taxes to the government. From the implementation of GST the service sector is believed to be affected largely than the trading and manufacturing sectors. Among several services offered by banks and NBFCs financial services like fund-based and fee-based can see major types of financial shifts due to GST from the current scenario.
The nature and volume of several types of operations offered by several types of banks and NBFCs like lease transactions, finance-related needs, and fulfilling organizational needs require lots of funds and GST affects small businesses to facilitate it better.
In this blog, you will learn how small businesses are affected by GST:
Registration of Business Becomes Tough and Hassling
Previously, before the implementation of GST in the country, any business be it small or medium could easily register their business by getting a TIN and GST registration for the enterprise running. Now, with GST, every business owner needs to spend some time in their business visiting a GST office and submitting documents in person. Also, the compliance burden increased with processing charges. If you are an NBFC owner, you need to go through a separate registration procedure based on your state.
Business Assessment and Paper Work Becomes A Complex Task
You need to visit the branch from where you have taken a business loan for your small enterprise. Whether you have purchased a business loan in Bangalore, Delhi or Guwahati, you need to justify your position based on your ROI from your small business. Also, you have to tell your bank that you are from which business domain. You need to pay proper tax to the government failing which your assessment will be rejected summarily. Also, you have to abide by the rules and guidelines of the government so that you can easily handle every business operation.
Utilization of Tax Credit Should Be Clear Between You and The Government
With the implementation of GST, you have to ensure that you are coming under which jurisdiction. You need to clear your stand for your tax credit with the government. In this way, you can easily make collaboration with the adjudicating authority. Your adjudicating authority may take their respective view on the particular issue. You have to gear up and deal with your financial organization to run your business smoothly. You have to submit all documents related to your business registration which helps you tackle several types of GSYT registration issues.
GST Affects Account Linked Financial Services
It is clear that without GST, you can’t run your business with ease. You have to make your stand very clear in bringing stability to your business. In remote locations, your company may face several issues like GST registration and depositing tax-related documents physically to the government. There you have to make your presence clear and to transact several issues related to your enterprise.
Affects Financial Decisions
While making your financial decisions for getting a loan approved or submitting a new loan for your business. You will face several issues related to financial aspects. With GST, your business be it a startup or a middle-sized business can face operational issues due to non-payment or due payment of GST. You will get many messages, emails and calls from the income tax office to submit your tax very early. If you don’t have enough funds in hand, you can take a business loan in Bangalore which will help you manage your finances very easily. You have to take care of securitization of your business operations with B2B or B2C operations which are all taxed for running your business.
Summary
Small businesses suffer a lot in handling day-to-day operations, especially in this GST tax regime. If you want to run your business in a remote location, you have to visit the GST office in person. You have to face high tax and GST implementation issues related to your business. You need to deal with 18% GST for all your business clients and customers and sometimes they aren’t ready to pay 18% GST which is a major backthrow of this tax system. There are other issues related to GST like unplanned finance management etc.
