India Small, Micro and Medium Enterprises (SMME’s) Business Overview
India is likely to emerge as one of the leading economies by 2024, with a GDP of $5 trillion. The Indian government, aiming to ensure the MSME sector, contributes at least $2 trillion.
Micro, Small, and medium enterprises (MSME) constitute one of the most vital sectors within the Indian economy, contributing significantly to employment creation, export growth, and inclusive development.
In addition to 45% of total industrial output, 40% of total exports, and a significant contribution to GDP, Micro, Small, and Medium Enterprises (MSME) are also the backbone of India’s socio-economic development.
Over 30% of India’s GDP is accounted for by MSME’s, which accounts for nearly 50% of its export and a third of the manufacturing output. These companies employ more than 11 crore people and projected to grow to be 15 crores by 2023.
A rapid adoption of digital payments over the cash has occurred in Indian MSMEs with 72% of payments conducted electronically versus 27% in cash. This growth is adoption presents the sector with potential for further growth.
How to Register for GST as Small Business.
Small Businesses or new startups should be familiar with all the laws and regulations they may be subject to, as well as the GST taxes they might have to pay.
A more straightforward and integrated system of taxation called GST, or Goods and Services Tax, was introduced in 2017 in order to simplify and simplify the taxation system for citizens and businesses of all sizes.
There are many benefits associated with GST for small businesses, but when you look at all its benefits, you’ll see that it’s more positive and incrementally beneficial to business in the long run.
What are the requirements for GST registration?
The manufacturing sector and companies with a turnover exceeding rupee 40lakhs need GSTINs, whereas businesses with a turnover of rupee 20 lakhs or more need GSTINs for the service and ecommerce sector. Exceptions include north-eastern states of India where a minimum amount of 10lakhs is required.
How to register for GST in India with the following documents:
Document list for GST in India –
- The owner’s passport-sized photograph.
- The company’s PAN CARD.
- Identification documents (passports, aadhaar cards, or driver’s licenses).
- Companies in the LLP, OPC, or private limited company class must have a certificate of association.
- Detailed information about your bank account (bank statements, cancelled checks, passbook, etc.)
- Partnership deeds are required for partnership firms.
Procedures for Small Businesses to register for GST
Once you have prepared the above-listed documents, you can register your small business via the Internet by visiting https://www.gst.gov.in/. It is necessary to create an account on this website first. Following that, you will have to provide your personal information, your business details, your goods, your HSN codes or SAC codes, and your banking details. If everything is done correctly, you will be granted a GST number.
Registration of small businesses under GST has an impact
In the following paragraphs, we discuss a few of the major positive impacts on GST for small businesses.
Impact 1: Since GST is now a unified tax, it reduces the burden on the economy. Getting rid of the tax-on-tax concept led to the merging of all indirect taxes, including VAT, excise duties, service taxes, etc. Thus, small and medium businesses can save more directly.
Impact 2: One of the major benefits of having a GSTIN is the opportunity to obtain a collateral-free loan. If you wish to apply for a loan, we still suggest evaluating your business’ financial position and your potential Equated Monthly Instalments (EMI).
Impact 3: Composite scheme: for businesses with an annual turnover of up to rupee 75lakh per annum, a flat rate of 1%-5%. This fund is only available to small businesses that meet the certain criteria. It was previously limited to rupee 1.5crore in a year, but later it was lowered to rupee 75 lakhs per annum.
Impact 4: A low-cost interstate transport system is possible with GST in action since there is less paperwork and less checkpoints required to move goods across the border. Small businesses can expand easily with no need to worry about excessive transportation costs.
Impact 5: Prior to the current tax structure, different areas of production were taxed differently, which resulted in higher costs and lower pricing efficiency. Because GST is a value-added tax, this solution solved the problem as tax is only imposed on the value added.
The GST challenges faced by small businesses
Managing working capital and technological challenges are two of the biggest challenges faced by small businesses in India.
As a result of the first problem, small businesses in India that are not technically adapted to handle the online GST system end up outsourcing the system and incurring additional costs as a result. GST registration is also required in all states where SME’s have business activities with an annual turnover of rupees 20 lakhs or more.
As opposed to the previous taxation regime, within the GST regime exports are no longer eligible for tax exemptions on goods exported. Business funds are blocked as a result, which challenges their operations. There are times when businesses have to borrow money to function efficiently, which is rare occurrence.
GST Registration is one of the most essential things to keep small and medium businesses running smoothly in India. GST registration in India is not only simple but has many benefits for budding entrepreneurs. You can use the GST number to secure loans, reduce costs and make the business operations more efficient and flexible.