What Does The Goods And Services Tax Mean For Small Business Owners In India?

Goods and Services Tax is a system of integrated tax. It unifies various taxes and converts it into a single tax. This spells out the value of a nation having a single tax.

GST was implemented in India a few years back. People still find it difficult to understand the working and benefits of GST. It is a no brainer that people take time to understand and implement any new concept.

Impact of GST on Small Businesses

The small business brings about almost 70% of the jobs in the market. If you are a small business owner, you must know the benefits you could draw out of the implementation of GST. GST aims at bringing all kinds of businesses under a taxation structure.

Small businesses are involved in the deliveries of goods and services across different state boundaries. Under the cgst act, taxes would apply to the inter-state supply of goods and services.


  • It tends to eliminate the cascading effect of taxes

GST aims at consolidating all taxes into one single tax. It aims at bringing together all of the indirect taxes under the same roof. It strikes off the cascading effect of various taxes.

Earlier, you were used to paying different taxes. Sometimes, this system would lead to a situation called a tax on tax. Under GST, this process has been simplified due to the application of a single tax.

  • The same treatment of goods and services

Before GST, a VAT was applicable on both goods and services. Also, various offerings came with a compulsory service charge. GST has removed both of these complicated taxes from the goods and services.

This brings about a reduction in tax evasion. If you are into businesses dealing with packaged products, your job will become a lot easier. You will only have to calculate the tax once on the final product.

  • Registration at a higher turnover

The GST regime brings in the convenience of getting registered if you have a turnover greater than Rs.20 Lakhs. Earlier, your business had to be registered if you had a turnover of more than Rs.5 lakhs. Also, the value-added tax as applicable.

This provision helps small traders and service providers.

Type of Tax Limit for registration
Excise Duties 1.5 Crores
Service Taxes 10 Lakhs
VAT 5 Lakhs
GST 20 Lakhs (10 Lakhs in case of the North-Eastern States)
  • Ease of filing the taxes online

The process of filing the goods and services tax is done all online. You can easily do it yourself or with the help of an online filing app. This has made the system of filing taxes less cumbersome.

  • The option of Availing to Composition Scheme

Under Composition Scheme, if you are a goods and service provider with a turnover of fewer than 1.5 Crores (75 Lakhs in case of North-East states), you get to reduce your tax compliances. This lower tax rate would free up a lot of cash, which you could use in the business. You cannot avail this facility if:

  • You are a manufacturer of tobacco, ice-cream or pan-masala
  • You are involved in inter-state supplies
  • You are an e-commerce supplier
  • You are a non-resident taxable person
  • You are a casual taxable person
Business CGST SGST Total GST Applicable
Traders and manufacturers of goods 0.5% 0.5% 1%
Restaurants (Not serving any alcohol) 2.5% 2.5% 5%
Service Providers 3% 3% 6%
  • Fewer Compliances

Different taxes had different returns and set of compliances. If you are a small business owner, these compliances have reduced drastically with GST. 11 returns have to be filed.

4 out of 11 of which are basic returns. You can file them easily. Some are manually populated, and others are automatic.

Implementation of gst India has brought about multiple changes in the taxation system of the country.


  • Updating the regular software

Businesses had to make changes to their existing accounting and taxation system. This increased operational costs. Also, if you are a small business owner, you will have to spend some time and money in understanding the working.

  • Higher Tax Burden

Earlier, if you had a business with a turnover of more than 1.5 Crores, excise duty had to be paid. In the case of GST, you will have to make payments towards it when your turnover exceeds 20 Lakhs. If you avail the composition scheme, you will not be able to claim the input tax credit.


GST has brought about changes in the taxation system. You can be GST-compliant and enjoy the benefits that come with it. The unified system has made things quite easy for you.