GST Benefits for Small and Midsize Business

GST Benefits for Small and Midsize Business

The amount of tax liability of small and medium size businesses can lead to the bankrupt of such businesses. The introduction of GST in India seeks to avert such problems and others that may arise due to the tax structure in the country.

With the introduction of Goods and services tax (GST), the final consumer bears the tax burden and not the supplier. In fact, small business with aggregate turnover of up to Rs.5 lakhs and Rs.10 Lakhs are exempted from paying tax. Apart from this, there are other benefits GST avail to small and midsize businesses.

  • It makes Business Start-up Easier

. Before the introduction of GST, is important to carry out VAT registration in the state where the business is carried out. For a business to carry out transactions in different states, the owner must understand and comply with the different tax structures for each state. The complexity of the procedure for starting a business in India can discourage any entrepreneur from putting his/her idea to bear. It is easier to start a business now as GST subsumes both the state and the central tax structures.

  • It Simplifies Tax Filing

As GST integrates the different states tax system as well as the central tax, it brings about consistency in the tax structure. GST allows small business to know their tax liability and ensures smoother tax filing. This promotes prompt payment of tax and as a result reduces the chance of compiling tax liability. The use of electronic ledger makes invoicing simpler especially for small businesses that use small business accounting software.

  • It Reduces Tax

Small and Midsize businesses enjoy reduced or no tax at all under GST. Businesses with low aggregate turnover can apply for exemption or become composition dealer. Although the concept of tax relief is not new, it is now expanded and uniform across states. Furthermore, businesses that deals with both goods and services, like restaurant businesses, do not need to pay for separate taxes for goods and services.

  • Opportunity for Expansion

Midsize businesses that are not under the composition scheme enjoy input tax credit (ITC) and this invariably lowers their tax rate. Small and midsize businesses can now carry out inter-state supply and purchase without the cascading taxes and tax regulations of different state. This allows a manufacturing firm based in one state to have production plant in another state and pay the same tax.

  • It allows Business Access to Loan

Access to capital can make or mar the growth of small businesses. Through GST, small businesses have thorough tax records to show their financial capability. These records can be presented to banks and other mending institutions to grant loan as a display of the credibility of the business and show the credit-worthiness of a small business.

  • Speedy Transportation of Goods and Services

With the elimination of checkpoints and double taxation, the delivery of goods and services from one state to another is now faster. Small businesses that wish to expand to another state do not have to worry about logistics costs and time especially regarding tax.  Speedier inter-state delivery of goods and services can go a long way in reducing the production cost and enhance the performance of small businesses.

Take advantage of the many benefits GTS provide for small and midsize businesses to simultaneously reduce your tax liability and expand your business base.

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GST Filing Process for Small Business

The economy in India underwent  the greatest tax reformation with the introduction of GST (or Goods and Services Tax), which is more or less a destination-based tax reporting structure. According to the latest policies introduced in India’s economic landscape, small-scale businesses can now increase their realms by capitalizing on the prospects of GST. Gone are those days when small and medium-sized businesses were compelled to file multiple taxations; today, with the implementation of the composition scheme, the burden that waa so long hovering over the businessmen’s mind has now been eliminated. This implies that filing for a GSTR is inevitably compulsory, and every business, irrespective of its size and sales must submit its report in due time(if no sales or purchases were made, there will be a NIL report).

The different paradigms of small and medium sized businesses

Generally  large businesses often have enough resources at their disposal to manage tax related matters, whereas small businesses lack enough capital to maintain adequate accounting information and tax liability. The income tax department have introduced  a more straightforward method for these large portion of small industries known as Presumptive method, where the income is calculated as per gross receipts of the business.Usually, most small businesses have an annual turnover of 50 lakhs or less; and with a configuration fluctuating within this window, paying the tax liability through composition scheme becomes incredibly easy. However, even though all the previously-variable taxes have now been combined into one, small-businesses is lagging in funds and technological expertise that qualifies as indispensables in this procedure. Ideally, simplification of the process requires businesses to depend on GST software that would automatically calculate and generate invoice and at the same time, keep an accurate tab of the tax.

Tax return filing obligations

Regular taxpayers file their GST returns after each month; but, for those under the composition scheme, filing GST returns quarterly, is compulsory. Small and medium sized business owners with less than 2 cr turnover evey year have chosen the presumptive income tax scheme depicted under section 44AD, section 44ADA, and section 44AE. These labels are required to file their tax returns via the ITR-4 form. But, those owners who have avoided the presumptive income scheme and yet have profits that exceeds 2 crores in 12 months’ time will have to file through the ITR-3 form. In the following segment,  we will be mentioning the obligations of taxpayers who file under GSTR-4, GSTR-4A and GSTR-9A schemes.

Small dealers must their expense history, split between GST registered and non- registered entities. The entire turnover or gross receipt as per GST and GSTIN must be logged while filing ITR-4. The details of both CGST and SGST/IGST paid on purchases, sales and expenses must be specified under profit and loss account, by business owners who are filing their returns under ITR-3, ITR-5 and ITR-6. You must also know thar if any amount of input tax credit remains unclaimed as of 31st of the year, must  be mentioned under “Schedule OI” (Other Information) of the parallel ITI form. In all, all regular businesses alike should file two monthly returns and a single return.

But, the composition dealers will be needed to fill out returns separately. A composition dealer who attracts a turnover of more than 1 crore annually should pay the tax on total sales and that too at a specific rate. An interesting reminder here is that the dealer pays taxes under reverse charge purchases from the unregistered sellers and import of good/services. But these very dealers have the privilege of absorbing benefits from compliance and returns that are not upto the mark with tax payment at inexpensive rates.


The GSTR-4 can be equated with GSTR-1, as both of the scheme have same string of requisites and implications. Because small-scale businesses are not eligible for input tax credit, they are spared from filing the GSTR-1 and GSTR-2. In the GSTR-4, the taxpayer is expected to declare a precis of his outward supplies with accompanying details such as tax payable and tax payment. The return is to be filed on the 18th of every quarter end, stepping beyond which will opens doors to a lump sum as the penalty fee and inability to file in the next quarter.

There is a total of 13 sections on the GSTR-4 form. After logging in to the portal, your name, GSTIN and aggregate turnover will be automatically published on the page. Nevertheless, sections of information including outward supply, taxable inward supply, debit notes, imported goods and services and credit notes can be corrected, if there appears to be a mistake. But, once all the details are confirmed, and the form is signed and submitted, there is no going back until the next quarter.


All the seven parts of this form are auto-drafted by the GST system. It contains the credentials of the taxpayers, details of the debit and credit notes received, inward supplies received from a registered taxable person and the modifications necessary from the earlier tax periods. Apart from the rudiments, the TDS credit received must also be updated on tbe form.


GSTR-9A concerns the annual returns for the compounding tax payers. For the other regular taxpayers, they must file under GSTR-9A form. This annual return calls to be filed on the 31st of December every year and the repercussion of refusing to file it attracts Rs. 200 each day. There are 5 parts of in this form, namely:

  • Details of the taxpayer
  • Summary of quarterly returns registered in GSTR-4 for outward and inward supplies across the year.
  • Crucial particulars of the tax paid in the financial year including late or penalty fees.
  • Inputs about the modifications made in the preceding financial year.
  • Details of the refunds, credit reversed, demands and other penalties, if any.

These forms and their regulations apply for small businesses with tax turnover of less than 50 lakhs; nonetheless, if this bar is crossed, small businesses need to fill the GSTR-1,2,3B monthly and GSTR-9 annually.


Reverse charge in GST

What is reverse charge in GST?

Although the end consumer bears the final burden of the tax, the supplier must first file the tax. However, a situation where the recipient pays the tax directly to the government is termed reverse charge. This implies that the liability to pay tax on the supply of goods and services falls on the receiver instead of the supplier of such goods or services.

Reverse charge was expanded under the newly introduced GST structure. It is now applicable to goods supplied instead of only service provided. The main reason for putting in place the reverse charge mechanism is to ensure compliance to the GST laws and increase tax revenues of the government. As there are small businesses that are exempted from GST registrations, large businesses that purchase goods or services from these businesses that enjoy tax relief will file the tax in their stead.

When to Apply Reverse Charge

  • In the case where an unregistered dealer under GST supplies goods to a registered dealer, reverse charge is applicable. To pay this tax, the registered dealer has to do self-invoicing for the purchases. On the invoice, it must be clearly stated that a reverse charge was incurred on the purchases and a thorough and accurate record must be kept. To simplify this process, the recipient should make use of GST accounting software.
  • Purchase of items below Rs.5000 per day does not attract reverse charge even if you are buying from an unregistered dealer in intra-state transactions.
  • In the case of e-commerce operators, the tax burden on the services provided by them will fall on them. A representative of the e-commerce firm shall be appointed to be paying the tax on behalf of the company.
  • The purchase of agricultural products, like cashew nuts and tobacco leaves, and the supply of lottery attract reverse charge.
  • Services such as those provided by a non-taxable person, a person in a non-taxable territory, sponsorship service, and service of an insurance agent among others also carry reverse charge. This implies that the receiver of such goods or service will pay the GST to the government.

Time of Supply under Reverse Charge

The time of supply shall be the earliest of any of the following dates:

  • The date of receipt of goods
  • The date immediately after 30 days from the date of issue of an invoice by the supplier.

If the time of supply cannot be determined even with the aforementioned dates, the time of supply shall be the date of entry in the books of account of the recipient. You can use your online accounting software for easy generation of self-invoice, as the unregistered supplier cannot provide GST recognized invoice.

Other Points to Note on Reverse Charge

  • Buyers who use the goods or service they pay reverse charge for can claim Input tax credit on such payment. However, if the goods is for personal consumption there is no ITC on reverse charge.
  • Taxpayers under composition scheme are not eligible for reverse charge.

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GST E-way Bill Process

What is the GST E-way Bill Process?

The electronic way bill (E-way bill) is a document that is generated electronically for the movement of goods from one place to another. E-way bill is the GST version of Way bill, which covers both intra-state and the inter-state consignment or transportation of goods that are above Rs.50000. It is compulsory to generate E-way bill for movement of goods across and within states except in Delhi.

When to generate E-way bill

Before the movement of goods, either within the state or from one state to the other, e-way bill should be generated. E-way bill will be generated when there is a conveyance of goods above the value of Rs.50000 in a motor vehicle (either each invoice or consolidated invoice of multiple consignments).

The conveyance of goods might be in relation to supply. The conveyance might also be for reasons other than supply (for instance, return), or inward supply from an unregistered person. Supply here refers to a payment made in the course of business (sale), a payment that may not be in the course of business (supply return), or a barter/exchange (with no consideration of payment).

In some special situations, e-way bill can be generated even if the value of supply is less than Rs.50000. For instance, inter-state movement of goods from the principal to the job-worker and transport of handicraft goods by a dealer exempted from GST registration.

How to Generate E-way bill

The two ways to generate e-way bill is through the e-way bill system online or via SMS. Note that to generate e-way bill through any of these two methods some documents are required.

  • Invoice/Bill/Challan related to the consignment of goods
  • Transporter ID or the vehicle number if transport is by road
  • Transporter ID, transport document number and date if transport is by air, rail, or ship.

The first step to follow to generate e-way bill is to register on the EWB portal. After registration, you can login anytime on the e-way bill system online to generate your e-way bill.

The validity of EWB depends on the distance covered for the movement of goods. For goods less than 100kms it is valid for one day, for the distance over 100kms, then additional one day for every additional 100kms covered.

Who should generate e-way bill?

  1. For registered person
  • Every GST registered person who causes a movement of goods of consignment needs to generate EWB.
  • In a case where the registered person handed the consignment to a transporter, then the transporter will generate the EWB with the information provided by the registered person.
  1. For unregistered person
  • If the movement of goods was done by a person who is not registered under GST, either through his own conveyance, a hired conveyance or through a transporter, the person will generate the e-way bill himself.
  • If the conveyance is made from an unregistered person to a registered person, then the recipient will have to ensure compliance with the e-way bill rules.

Note that transporter must ensure the e-way bill for goods that are above Rs.50000 are generated as the refusal to generate it attracts a penalty or likely confiscation of goods.

There are certain circumstances that do not necessitate the generation of e-way bill. For instance, if the transportation distance is less than 10km within the state or union territory, if the item is not transported via motor vehicle or certain goods exempt from e-way bill requirement among others.

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GST Features in myBooks

GST Features in MyBooks

To keep your business afloat you need to maintain an accurate tax record and remove any chance of committing an error while filing your GST. As you cannot avoid the payment of your tax liability and filing either monthly or quarterly tax return, you would want to partner with a GST software that makes filing your tax return the easiest thing to do among your countless activities.

MyBooks GST accounting software has many unique features that rivalled all the other accounting software when it comes to simplicity, flexibility, and performance. You do not need any advance knowledge in IT or a diploma in accounting to utilize and take advantage of this software.

It is noteworthy to know the characteristics peculiar to MyBooks GST software.


  • Whenever the customer name is selected on an invoice, the place of supply will be automatically displayed. Remember that because GST is a destination-based tax the place of supply is a very important concept in the tax structure. The place of supply is the location of the recipient and not the supplier of the goods or services.

Interstate and Intrastate Tax

  • After the place of supply is displayed on MyBooks software, the inter-state and intra-state tax shall be loaded. You can know the total tax for both interstate and intrastate GST. You should know that interstate tax is covered by IGST and the intrastate tax is covered by SGST and CGST. Therefore when filing your return, you need to post under the appropriate GST type.

Bills and Expense

  • This is an important section on the MyBooks GST software. In this part, you have the place of supply and the reverse charge. The reverse charge is one of the components of GST in India. It simply means a situation where the recipient of the supply pays GST directly to the government instead of the supplier. This may be as a result of buying from an unregistered supplier or other reasons. In this section, you can create bill and expense without the tax amount and create self-invoice with the tax amount

Automatic Self-billed Invoice

  • It is required for a supplier to create self-invoice for a reverse charge, as the invoice given by the unregistered supplier is not acceptable to compute GSTR. MyBooks simplifies this process by auto-generating self-billed invoice for you based on the information you input in your reverse charge in the bill and expense section.

Features Related to GST Returns Generation

MyBooks user can enjoy a simplified, speedier and precise GSTR generation as the software affords its user the ability to display all the information necessary to generate GSTR-1. As GSTR-1 is filled with the outward supplies details, it deals with sales. MyBooks shows both the intrastate and the interstate sales made to both registered and unregistered persons as well as consumers.

MyBooks makes it easier to access and auto-populates GSTR-2. Due to the fact that GSTR-2 is an automated report generated from the information furnished under GSTR-1, MyBooks automate HSN summary, auto-compute Nil as well as exempt return for its user. The details needed to complete GSTR-3 shall be auto-populated from GSTR-1 and GSTR-2 in MyBooks software.

For invoice created on an e-commerce website, watch out for the updated version of the software shall be released soon.

myBooks Easy Online Accounting Software |Best Cloud Based Small Business Bookkeeping Software


GST Impact on Small Businesses

GST Impact on Small Business

As at the time the Goods and Service Tax was introduced on July 1st, 2017, it was the most significant talking point of the media, businessmen, analysts and government figures. Since independence in 1949, this is the biggest indirect tax reform carried out in India, and it is expected to have a wide range of impacts on different sizes of businesses in India. For this article, we will be focusing on its impact on small businesses and how online accounting software can cushion this impact.

Let’s have background knowledge of how GST works. It is intended to make the Indian economy a common unified market from the basis of tax payment. Straight from the manufacturer to the end user, there’s only one tax to be paid. You can think of the Goods and Service Tax as a multi-stage, a comprehensive and destination-based tax levied for every value added. GST brings together all of the other forms of taxes such as states and local tax, surcharges, excise duty, entertainment tax, and many others.

There are numerous benefits of the GST to small businesses; they are even the most affected by the new tax regime.

  • A decrease in Tax Burden

The previous tax regime gives tax exemption to only small businesses with a 5 Lakh turnover. With GST, the exemption has been raised to 25 lakhs. This means that a large number of small businesses across India are being exempted. A small business just has to put in place a cloud accounting software to have enough proof as to their turnover when tax officers come calling.

  • Starting Business Becomes Easier

With the GST, the need to abide by the different tax structure in a different state has been eliminated. There is now a unified tax system all over India and whatever applies to business in Karnata will be applicable in Goa or Gujarat. This simplifies things for businesses planning to open shop in new places. All of these businesses can be easily monitored via a small business accounting software.

  • No More Tax Distinction Between Goods and Services Industry

The ambiguity that used to exist between goods and services has been cut out by GST. This will help in legal proceedings as the ambiguity between the two sectors is being eliminated.

  • Improved and Faster Logistics

Before the GST, taxes have to paid at points of entries into different demarcated parts of India. This slows down the delivery of goods and services. With GST, all the taxes have been fused into one.

Of course, the GST isn’t all rosy for small businesses. There’s a learning period of the new tax structure that will send some small businesses out of business. Which is why there will be a need to hire a CA and those who cannot afford one being a small business will have to close shop.

With a cloud accounting software, you are able to easily monitor your taxes from a single source from multiple business locations. Small businesses will also face resistance from final consumers who will not be forthcoming in paying an extra GST tax on goods and services.