April 18, 2024

Business Bib

Business & Finance Blog

How Can Small Scale Businesses Get Benefitted By Filing GST?

5 min read

The GST was introduced in India in the year 2017. It is now applied by the government of India on the purchase of goods and services. Currently, GST offers four slabs, 28%, 18%, 12%, and 5%. Every goods and service except alcohol, petroleum, and electricity are included in one of these four tax slabs.

Further, the tax slabs are divided based on Central GST (CGST) and State GST (SGST). So, if a commodity falls in 28% slab, then CGST is 14%, and SGST is also 14%. When GST was launched, it replaced every indirect tax present in the Indian tax structure such as VAT.

In a wide-perspective, this simplified the tax structure. It helped businesses and taxpayers to acquire benefits of streamlined tax and accounting processes. Let’s see what benefit it holds for small businesses and how to file gst return online.

Benefits of GST For Small Business

The ‘One Nation, One Tax’ strategy has subsumed every tax of the nation and made functioning immensely easier for every small business. Given below are some of the different ways in which GST has benefitted small businesses and organisations.

Going Online

One of the fantastic benefits of GST is going online. A lot of small businesses have started filing their taxes online through a free gst billing software. This helps them reduce cost and time, which they used to spend on taxes. The team can even re-check and evaluate errors to refile the returns whenever an issue arises.

Even the tax online structure has enhanced because of the efforts of the government to reduce hassle in direct payments of taxes. To shift critical payments online, the online GST configuration has been significantly modified.

Undoubtedly, GST has enabled small organisations to come under the circle of digitisation. This indirect benefit has directly impacted the business eco-system by seamlessly integrating robust workflows and reducing errors.

Previously, digital methods of tax payments were uncommon, and the tax structure had a series of paperwork. Now, GST digitisation has encouraged even start-ups to accept the digital landscape for GST taxation and enhanced transparency in their GST structure.

Simple Taxation

It not unlikely for small businesses to push tax routines and returns to the backseat. There’s already so much on the plate, so it is simply not feasible to dedicatedly place 1-2 resources for taxation.

Traditionally, when the company had to manage multiple indirect taxes that too, according to various states, taxation was extremely complex. Think about it, from VAT to service tax. There were numerous calculations, thousands of guidelines, and an array of compliance requirements.

Don’t you need a team for all that? Not anymore! With GST, every indirect tax has been subsumed; reducing the tax compliance regulations. Hence, simplifying taxation.

If a business has INR 1.5 crores of turnover, then taxes should be paid quarterly. This was declared in a GST council meeting. It indicates the improved taxation structure and reduced hassle.

Increased Efficiency

Let’s understand this with an example of the logistics industry of India:

Traditionally, when we had multiple indirect taxes, the logistics industry suffered the most. They had to practically set up more than one warehouses in different states to avoid inter-state movement, which can incur high entry taxes.

This not only means that the cost of management of warehouses went up, but also the operating efficiency was less. When a warehouse is not functioning up to its full capacity, the efficiency is low.

With GST, multiple e-commerce providers moved their warehouses at a central location for improved logistics. It increased efficiency because of better warehouse management and full capacity utilisation.

Proper Audit

The GST structure prominently highlights a strong audit mechanism to ensure compliance for the taxpayers. The GST department encourages every taxpayer to provide self-assessment for proper payment of taxes without any intervention and taxation issue.

If a small business has a turnover of more than INR 2 crores, it is necessary to get the accounts audited from a cost accountant or a skilled CA.

This audit helps in the following things:

  • Correction of provided data
  • Settlement of taxes
  • Checking of claimed returns
  • Checking of ITC (input tax credits)

The audit management accompanied by GST makes it seamless for organisations to maintain compliance as well as keep their systems financial sound.

Enhanced Transparency

One thing that has been discussed throughout this article is the simplification of the indirect tax structure. A significant benefit of this simplification has been transparency.

Earlier, it was not possible for the taxpayer to track the taxes. There were so many of them. As a result, there were frauds, corruption, and tax avoidance. Ambiguities in the system made it complex for the taxpayers to keep track of everything.

With GST structure, we have one tax, one structure, one type of audit, and one type of management; for everything. The technology-driven structure allows GST taxpayers to track their taxes and avoid ambiguities transparently.

ITC Benefit

GST contributes in removing the cascading effect. This is something we already know, but the question arises; how does this change impact small businesses?

When the taxes were applied on a cascading basis, then every product was taxed multiple times at multiple stages. This increased the cost of management. Therefore, making small businesses uncompetitive in terms of cost management.

However, with GST, the cascading effect is eliminated. You need to pay GST on value addition. For example, if an organisation or taxpayer needs to pay INR 1000 GST, but they have already cleared INR 275 during the inputs, they have to pay the balance only. This amounts to INR 725.


Of course, GST may present itself as a hassle that increases your burden rather than reducing it. However, the benefits, as discussed above, acquired from the GST structure are incomparable. From improved efficiency to cost-effectiveness, small businesses can gain optimum benefits from this GST landscape.

If you deep dive into the above benefits, it is not hard to see how GST slowly and gradually increases the adeptness of your processes. Ultimately, enhancing your market competitiveness. As a citizen, it is vital to keep tabs on all the financial changes occurring in the country and with GST that becomes easier.