GST is one of the most significant reforms that India has taken after Independence. But it has created a lot of confusions and concerns among many small business owners.
It is said that GST is going to pave the way to an incredible growth in the Indian Economy. Taxes like Excise, VAT and Service Tax have been combined into a single tax system under GST. And once it is completely implemented, it will realize the dream of ‘One Country, One Tax’.
The small business owners in small towns and villages are very concerned about how GST is going to affect their businesses.
Therefore GST is bringing a new ‘Compensation Scheme’ for those who are not capable of executing complex calculations and handle important documentations. It was introduced to reduce the effort for small businesses by providing a relaxation on the frequency of the filing of GST Returns. The taxpayers who have registered under the compensation scheme will only be required to pay a lesser amount of tax. This is one of the most important properties of this scheme. This scheme will be profitable for business owners who are dealing with products of high tax rates. At the same time, it won’t be a good option for those who deal with products of very low tax rate and exempted goods.
A normal taxpayer is supposed to file returns three times in a month and an additional time every year with whole year’s data. Which means that person is supposed to file GST Returns for 37 times in a year to the government. If the taxpayer fails to do so he/she will be required to pay an interest or a fine or both to the government.
Small business owners are obliged to keep the account books and all the papers and receipts that prove every deals and transaction, safe at all times. The taxpayers under the composition scheme will only be required to file the GST Return once every 3 months. This allows the taxpayers to take the effort required to maintain, away from all the calculations or bookkeeping and focus more on their Business.
Even Though GST has a lot of advantages, this period of transition is where most of the people are not aware of the limitations of GST. And there is a good chance for some to take advantage of this opportunity to try evading tax or make extra profit by overcharging consumers while blaming it on GST.