GST Registration for Small Businesses


Whether you are starting a new business or running a small business, you should be well-versed with all laws and regulations it may attract. It also includes all the taxes their business may have to take care of.

GST which stands for Goods and Services Tax was introduced in 2017 with the aim to help taxpayers and businesses of all sizes in getting rid of complex central and state taxation systems and replace them with a more straightforward and integrated system.

GST may seem like a mixed bag for small and medium businesses in the short term, but when you go through all its benefits, you will see that it has a more positive and incremental value impact on your small business. Here is everything a small business needs to know about GST Registration.

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Eligibility for GST Registration

Businesses belonging to the manufacturing sector and having a turnover exceeding ₹ 40 lakhs need to have a GSTIN and for the service sector, the said amount is ₹ 20 lakhs or more. This also includes e-commerce. However, north-eastern states are an exception where the amount is a minimum of ₹ 10 lakhs.

Documents Required for GST Registration

Here is a list of required documents:

● Passport-sized photographs of the owner(s)

● PAN Card of the company

● Identity proofs (Aadhaar cards, passports, or driver’s license)

● Certificate of association for LLPs, OPCs, and private limited companies

● Bank details (bank statements, passbook, or canceled cheques)

● If it is a partnership firm then the Partnership deed

GST Registration Process of Small Businesses

For GST registration of your small business, keep the above-listed documents ready. Then just simply apply online by visiting On this website, you first have to register yourself and then you have to provide personal details, business details, goods and services along with HSN codes or SAC, and banking details as well. If everything goes fine here then you will get a GST number.

Impact of GST Registration on Small Businesses

There are Positive impacts of GST on small businesses, and we are describing some major ones below.

1. Unified taxation

GST reduces the tax burden as no separate tax is levied now. The government brought all the indirect taxes like VAT, excise duty, service tax, etc. under one system by getting rid of the tax on tax concept, which resulted in more direct savings for small and medium businesses.

2. GST Business Loan

GSTIN holders have the privilege of getting a collateral-free loan as per GST return to boost their business. It is one of the major benefits of having a GST registration. However, we will suggest that you evaluate the financial position of your business and your potential Equated Monthly Instalments (EMIs) before applying for any loan.

3. The benefit of the composite scheme

The composite scheme allows businesses with a turnover of up to ₹75 lakh per annum to pay tax at a flat rate of 1%-5%. This plan is only for small-scale businesses meeting specific requirements. Previously this limit was 1.5 crores in a year but later it was reduced to ₹ 75 Lakh.

4. Affordable interstate transport

With GST in Action, business owners do not need to spend huge amounts to move their goods across the border. With better management and fewer check posts, small businesses can expand their footprint easily without worrying about heavy fees on transportation.

5. No Cascading effect

The previous taxation structure had a huge cascading effect, so the same product is taxed at different levels of production which lead to higher costs and lower pricing efficiency. Since GST is a value-added tax, it solved the issue because with the GST system tax is only imposed on the value addition.

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Challenges Small Businesses are facing with GST

There are two major challenges for small businesses i.e. Technological difficulties and Blockage of working capital.

1. Technical difficulties

The first is primarily affecting businesses that are not technically adapted to handle the online GST mechanism. They are not aware of the practical details of online GST filing and have to outsource it. This adds to the cost of registration and filing. Additionally, SMEs with an annual turnover of ₹ 20 lakhs or more need to have GST registration in each and every state they have business activities in.

2. Blockage of working capital

This problem occurs in very few cases. While in the previous taxation system, exports used to get the benefit of tax exemption on the goods exported, this is not available in the GST regime. Tax refund delays block business funds, which affects their operation. This is a rare problem but when it occurs businesses struggle to operate at full efficiency and they have to take business loans.

In Conclusion

Business owners and businesses may have various other essential things to take care of to keep their businesses running but GST Registration is equally essential. If you as a business owner ignore the initial stress of GST registration then there are more benefits you can avail yourself. The GST number will help you in many things, including securing loans and making the overall operations hassle-free and progressive.

(Authored by CA Amit Gupta, MD, SAG Infotech)