How to get GST Number for Small Business (Complete Guide)

GST may initially appear to be a mixed bag for small and medium-sized businesses, but once you consider all of its advantages, you’ll realize that it actually has a more positive and incremental value impact on your small business. Here is everything you need to know about how to get GST number for small business.

Who needs to register for GST?

Businesses in the manufacturing sector with a turnover of more than Rs 40 lakh must have a GSTIN, while businesses in the service sector must have a turnover of Rs 20 lakh or more. This also includes electronic commerce. However, there are exceptions in the northeastern states where the minimum amount is Rs 10 lakh.

This high threshold under GST has made compliance easier for many SMEs, including Indian start-ups.

 A composition scheme for small businesses operating in India has also been introduced under the GST. The system offers low tax rates to businesses with annual turnover below Rs 1.5 CRORE.

What are the documents required for GST?

The following documents are required:

Passport photo of the owner

Company PAN card

For Identification (Aadhaar card, passport, or driver’s license)

Company Certificates for LLP, OPC, and Limited Liability Company

Bank details (account statements, passbooks, or canceled checks)

For partnerships, partnership deeds

How do I apply for a GST number?

Please have the above documents ready to register your small business for GST.

Apply online on the GST portal. This website requires you to first register and then provide your personal information, business information, goods and services with HSN code or SAC, and banking information. If all goes well, you will get a GST number.

What is the impact of GST registration on small businesses?

GST has positive implications for small businesses and some of the key ones are:

1. Unified taxation

GST reduces your tax burden as there is no separate tax levied. By abolishing the concept of levying all indirect taxes such as VAT, consumption tax, and service tax, the government combined them into one system and increased direct savings for SMEs.

2. Business Loan

GSTIN holders can receive unsecured loans depending on their GST return to boost their business. This is one of the main benefits of GST registration. However, it is recommend evaluating your company’s financial position and the potential monthly payment (EMI) before applying for credit.

3. The benefit of the composite scheme

The composite scheme allows companies with an annual turnover of up to Rs 75 lakhs to pay tax at a flat rate of 1% to 5%. This plan applies only to small businesses that meet certain requirements.

4. Affordable interstate transport

With GST in place, business owners do not have to spend a lot of money to transport their goods across borders. Small businesses can easily expand their footprint without incurring expensive transportation costs if they have better management and fewer checkpoints.

5. No cascading effect

Due to the significant cascading effects of the previous taxation system, the same product is taxable at various stages of production, increasing costs and decreasing pricing effectiveness. Since GST is a value-added tax, the GST regime will only tax the value added, thus solving this problem.

What are the GST challenges faced by small businesses?

Working capital management and technology challenges are two of the biggest challenges facing Indian SMEs.

The first problem has resulted in Indian SMEs, which are not technically adapted to handle the online GST system, outsourcing the system, thereby incurring additional costs. Also, GST registration is a must in all states where small businesses with an annual turnover of Rs 2 lakh or more are doing business.

Unlike previous tax regimes, exports within the GST regime are no longer subject to tax exemption on exported goods. As a result, business funds are frozen, posing a challenge to their operations. In rare cases, a business may need to borrow money to operate efficiently.

FAQ

How long GST registration takes?

It usually takes 2-6 business days to register for GST.

Do I have to pay GST if I make less than 30,000?

Yes, you do not have to pay GST if your income is less than Rs. 30,000. You should start charging GST for any deliveries that caused more than Rs. 30,000.

Is there a fee to get a GST number?

There is no GST registration fee. Therefore, you do not have to pay anything to register under GST. However, GST penalties apply for tax delinquency or underpayment.

Wrapping Up

GST registration is one of the most important things for a small business to run smoothly in India. GST registration in India is not only simple, but it also has numerous advantages for aspiring entrepreneurs. The GST number enables you to borrow money, cut expenses, and improve the flexibility and efficiency of your company’s operations.

Recommended Articles

Compulsory Registration under GST (Complete List)

Calculate GST on Under-Construction Property with Examples