What are the Benefits of Filing a GST Return for a Small Businessman?

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By Rakib Sarwar

With the implementation of GST, India witnessed one of the biggest tax reforms ever. GST or Goods and Services Tax subsumed 17 taxes levied by central and state governments, thus simplifying the indirect tax structure of the country.
Among the various benefits of GST, simplification in return filing for businesses is noteworthy.

Since its launch, GST received mixed responses from businesses across industries as well as consumers.

However, positive prospects of its long term effects found acceptance among Indians, reflecting in improved GST collections over time.

● GST collections saw a 9% growth in December 2019, reaching Rs.1.03 lakh crore. It showed a reversal in trends for the previous few months.

● Goods and Services Tax collection from domestic transactions solely saw a growth of 12%., highest for the year.

GST filing and its benefits for small businesses

While GST serves as a barometer of businesses’ performance in the country, meeting compliance requirements allows companies to reap several benefits.

With several new changes introduced to GST return filing, the impact of GST for small and medium businesses bring several advantages. The likes of GST composition scheme testify of the far-reaching benefits for small businesses.

● A total number of active composition taxpayers in India registered with GST reached 17.55 lakh till date. Taxpayers under the GST composition scheme comprise small companies only.

The following are the GST return filing benefits listed down for small businesses.

a) Leverage via an online portal

The unified GST portal allows businesses to complete compliance requirements for GST. From registration for GST online to filing returns and checking status, the portal offers flexibility as well as the freedom to make changes as and when required.

Businesses can conveniently rectify any errors discovered and re-file their returns in time via the portal. The benefits of GST thus extend to small businesses as they can conveniently comply with the requirements in one place while saving their time and resources.

b) Simplified as well as cheaper compliances

Along with simplicity, the compliances have become less expensive in the case of GST as compared to the previous indirect tax system. Under the GST regime, businesses with an annual turnover within Rs.40 lakh are exempted from paying the tax, thus bringing relief for SMEs and MSMEs.

The reduced compliance burden allows micro, small and medium enterprises (MSMEs) to channelize their resources towards business growth and expansion.

c) Benefits via GST composition scheme

The benefits of GST for small businesses also extend after the introduction of the composition scheme.
The scheme was introduced to provide relief to small taxpayers. Under the tax-paying mechanism, manufacturers of goods with a turnover under Rs.1.5 crore in the current financial year can apply for a composition scheme.
For service providers, the turnover threshold is Rs.50 lakh, and it is limited to Rs.75 lakh for states listed under a special category.

Businesses opting for the GST composition scheme can enjoy two specific benefits; their compliance requirements, as well as tax liability, are reduced. Businesses thus need to file only quarterly returns and annual returns via forms GSTR 4 and GSTR 9A instead of monthly returns.

Also, they can pay GST on goods at a fixed rate ranging between 1% and 6% (depending on the type of goods manufactured) on their turnover.

● The 23rd meeting of the GST council has proposed raising the turnover threshold for manufacturers to Rs.2 crore for tax payment under the scheme.

Amendments made to the GST Act can thus allow more and more small businesses to enjoy the benefits of GST via the composition scheme.

d) Improved ease in doing business

The standardized implementation of GST throughout the country has simplified the indirect tax structure of India, allowing small businesses to make the most of it. As GST replaces several indirect taxes, the compliance requirements reduce too.

Alongside online return filing, streamlined movement of goods between states makes GST compliance trouble-free. The elimination of cascading effect or ‘tax on tax’ has further increased the benefits of GST for small businesses. A credit of input tax is now claimable irrespective of the tax charged at the manufacturing stage or during the sale, which was not the case previously.

All of it adds up to improve the ease of doing business for micro, small and medium scale enterprises along with others.

e) Accessibility to markets across the country

GST implementation has also done away with the complexity of paying different taxes to concerned states as per transactions made. Small businesses can thus reach out to different markets across India without worrying about these hassles.

Ease of GST return filing has also ensured businesses file their returns in time to enjoy other benefits like availing additional finance such as business loans for growth and expansion. The returns serve as essential documents required by financiers for loan approval.
Lenders like Bajaj Finserv have made availing these advances simpler via minimum eligibility and document requirement.

As for GST, new and improved changes to the taxation system only allow small businesses to integrate it into their daily operations with ease. Make sure to file returns in time to abide by compliance requirements as well as enjoy the benefits of GST.

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