As part of "One Nation, One Tax," the Indian government implemented a new tax known as the "Goods and Services Tax" on July 1, 2017. To employ this tax, the government's main objective is to reduce the burden of various taxes on their citizens.

The GST tax simplifies taxes, expands compliance rates, and promotes national economic growth. The new tax system was put into place. However, small firms in India have been unsure whether GST is required. This blog article will discuss how the GST affects India's small enterprises.

Is GST compulsory for small businesses in India?

What is GST?

The Goods and Services Tax, or GST, regulates taxes nationwide. GST replaced various indirect taxes that affected Indian citizens previously, such as value-added tax, service tax, sales tax, excise duty, and vice versa. In India, a tax known as GST is imposed on various Goods and Services. Its tagline refers to "one nation, one tax."

It is a destination-based tax charged at the point of consumption, and revenue is collected by the state where consumption occurs. It is a destination-based tax charged at the end of consumption, and revenue is managed by the state where consumption occurs.

The GST has replaced indirect taxes, including service taxes, VAT, and several state taxes. India has implemented a new tax system to simplify compliance, lessen the cost of multiple taxes on enterprises, and develop a unified market for products and services.

Is GST essential for small businesses?

The process of providing you with an accurate answer is not as simple as many people think, but spreading knowledge and keeping up with learning is easy. GST registration is mandatory for businesses whose turnover exceeds a certain threshold. As per the GST Act, businesses whose turnover exceeds Rs. 40 lakhs (or Rs. 10 lakhs for particular category states) must register for GST. This limit is Rs. 20 lakhs for businesses in the northeastern states of India.

It is imperative to note that this turnover threshold applies to businesses that supply goods. The turnover limit for companies that provide services is Rs. 20 lakhs (Rs. 10 lakhs for particular category states).

Therefore, if your small business's turnover exceeds the prescribed limit, you must register for GST. However, GST registration is optional if your turnover is below the threshold. It is imperative to note that even if your turnover is below the required threshold, you can still opt for voluntary registration.

Advantages of GST registration for small businesses

While GST registration may not be mandatory for small businesses whose turnover is below the threshold, there are several advantages to registering for GST voluntarily. Some of these advantages are:

  • Increased credibility: GST registration increases the credibility of your business as it shows that you are a legally recognised entity. You may gain the trust of potential customers, partners, and lenders by following these procedures.
  • Input tax credits can be claimed on the GST you paid on purchases if registered for GST. That might decrease your liabilities and increase your cash flow.
  • Internet sales: You can sell your goods on e-commerce websites like Flipkart, Amazon, etc., if you register for GST. Your customer base might grow, and revenues could increase.
  • Compliance with the law: GST registration ensures your business complies. By doing this, you can easily avoid penalties and legal action.
  • Company expansion: By facilitating transactions with other registered taxpayers, GST registration can assist you in growing your company. Moreover, you may benefit from the program and incentives the government provides to GST-registered companies.
  • How can I get GST registered?

    If your small business's turnover exceeds the permitted threshold or you voluntarily register for GST, you can do so via the official GST website. Go and sign up for the GST within just a few steps:

    • Go through this link
    • NGo to "Registration" and click the "Services" button.
    • Add information such as your PAN and contact to complete the registration process.
    • Verify your details using an OTP sent to your registered mobile number and email ID.
    • Fill out the registration form with information about your business's nature, bank account information, and the type of GST registration.
    • Submit records such as bank statements, PAN cards, and Aadhaar cards,
    • Upon submission, the application is awaiting processing.

    You will get your GSTIN (Goods and Services Tax Identification Number) once your application is accepted, at which point you may start creating GST invoices and reclaiming input tax credits.


    GST registration is mandatory for small businesses in India whose turnover exceeds a certain threshold. The opportunity to sell online, enhanced reputation, and input tax credits are only a few advantages of registering, even if it may not be required for businesses below the point. Simple registration procedures are available online on the GST portal. Understanding the GST's applicability and registering for it, if necessary, are crucial for small business owners who want to stay in compliance with the law and avoid fines.

    Share this post

Recent Post

  • Contact Us

  • Should be Empty: