GST Registration for MSME

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GST stands for goods and service tax. It is an indirect tax and has several benefits for every business entity in India. GST Registration for MSME can also benefit entrepreneurs in MSME Sector. In this article, we will understand GST Registration for MSME in detail.

Know about GST

GST stands for goods and service tax. It is an indirect tax that has to be collected from customers when you sell your goods or services and is required to be submitted to the government.

In simple words, GST(Goods and Services Tax) is an indirect tax that the sellers have to collect on the behalf of the government. To do so, sellers have to get GST Registration and GSTIN Number.

Thus, GST has replaced several indirect taxes such as excise duty, VAT, services tax, etc.

Moreover, it is completely online. Hence, it boosts the speed of the whole process from registration to return filing.

Definition of MSME

MSME Stands for Micro, Small, and Medium Enterprises it facilitates the development & promotion of enterprises through various benefits & schemes.

Established by the Indian government in accordance with the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, are businesses that produce, manufacture, process, or preserve products and commodities.

MSMEs contribute significantly to India’s socio-economic development. Therefore, the Indian government provides several advantages to businesses having MSME Registration.

However, in some cases, MSMEs also need to have GST Registration for availing of the benefits.

Let’s look at the advantages of having GST Registration for MSME.

Benefits of GST Registration for MSME

Although there are several benefits of having GST Registration for MSMEs. Let’s understand the most important ones.

GST Registration helps in Receiving Loans 

MSME Loans, also known as Micro, Small, and Medium Enterprise Loans, are forms of loans available to businesses having MSME Registration.

This sort of loan provides you with working capital that you may utilize for a variety of things, including buying new merchandise, acquiring new equipment, paying your employees’ salaries, and expanding your firm. To get these loans, one might need GST Registration.

Furthermore, MSME loans are available to Micro, Small, and Medium Enterprises (MSMEs) for the expansion or start-up of new firms. Generally, MSME loans have a starting interest rate of 7.65% per year.

The loan amount might range from Rs.50,000 to many crores. Furthermore, The loan payback period might be as long as 15 years, depending on the loan amount.

GST Registration under Composition Scheme Benefits for MSME

GST also has a very beneficial scheme for MSMEs or small taxpayers. This scheme is a Composition scheme and it helps small taxpayers in MSME Sector to get rid of it.

The scheme allows taxpayers to pay GST at a fixed rate of turnover. To avail of the Composition Scheme, companies need to have a total revenue of less than Rs 1.5 crore*. However, The maximum in the North-Eastern states and Himachal Pradesh is currently Rs 75* lakh.

Input Tax Credit under GST

As we all know, GST provides Input Tax Credit Facility. In simple words, it allows reducing the tax that was already paid on inputs. These Input Tax Credits are only for those enterprises who have GST Registration and pay tax on purchases.

Aids in Opening a Current Account

As we all know, a Current account is an important tool for businesses. It allows high liquidity and ensures funds at no extra interest charged allowing daily transactions. Moreover, under the Current Account, you get an overdraft facility.

Almost every business that does daily transactions needs to have a current account. Therefore, MSMEs can open a current account in any bank after fulfilling the eligibility criteria. This includes GST registration or Company Formation.

Reduction in Cascading Effect of Taxes

Earlier businesses under MSME had to pay VAT(Value Added Tax) and other indirect taxes at different stages. The disadvantage of VAT was the cascading effect. As it didn’t allow any input tax credit.

However, with the introduction of GST, there is an elimination of cascading effects. GST brings all the indirect taxes under one umbrella supporting the notion of one nation and one tax.

The primary requirement of GST Registration in the E-Commerce Sector

Most of the MSMEs are now entering an online world. The E-Commerce sector is one of the most popular opportunities among many enterprises. However, as per the law, operating an E-Commerce business mandates having a GST Registration.

Furthermore, E-Commerce giants such as Amazon, Flipkart, Meesho, etc. allow only those businesses having GSTIN to operate on their portal. To know more about GST Registration for E-Commerce, you can visit – GST Registration for E-Commerce

GST Registration for Restaurants

If you want any other guidance related to GST Registration or GST Return filing, please feel free to talk to our business advisors at 8881-069-069.

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