GST Basics For Women Entrepreneurs In India

Every entrepreneur in India should learn GST Basics, especially women entrepreneurs. Don't let the unfamiliar words and rules dissuade you!

Every entrepreneur in India should be well-versed in GST Basics, especially women entrepreneurs. Don’t let the unfamiliar words and rules dissuade you!

Growing a business from scratch is in itself a herculean task. However, social media and the internet surely have given wings to so many aspiring entrepreneurs to start a business even from home.

So, if you are someone who has started and is on the journey of growing your business, we understand that you must have thousands of responsibilities and day-to-day tasks that keep you super occupied.

Making sales is what makes any business profitable, but behind that one sale, there are innumerable activities that need to be done. And a small business owner is involved in almost all of these tasks personally, especially at the initial stages of the business. And, GST is yet another aspect that every business needs to deal with sooner or later.

Goods and Service Tax (GST) is a complicated law that goes through frequent changes and updates. Keeping up with the GST changes may be challenging for most small businesses since there’s already so much going on.

This article will help you to understand GST and all its aspects in detail, plus how you can use technology to keep yourself updated at all times!

What is GST, and why should you learn GST Basics?

GST Basics

In simple terms, GST or ‘Goods and Service Tax’ is an indirect tax used in India on the supply of goods and services. It was introduced in the year 2017 and has undergone several changes and updates since then.

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It is important for every business to have a GSTIN (unique GST number).

However, as per the GST Act, the government has made it mandatory for businesses to get GST registration if their turnover is 40 lakhs or more (Rs 20 lakh for special category states); prior to which businesses can voluntarily get their businesses registered under GST.

There are three taxes applicable under the GST system:

  • CGST: Tax collected by the Central Government on an intra-state sale
  • SGST: Tax collected by the State government on an intra-state sale
  • IGST: Tax collected by the Central Government for an inter-state sale

What is GST Compliance?

Every registered taxpayer needs to adhere to the GST compliance requirements. The applicability of GST compliance depends upon the Aggregate Annual Turnover (AATO) there are several forms (or GST returns) that need to be filed at varying frequencies to reveal your sales and purchase data to the Government.

Composition Taxpayer

Composition Scheme is a simple and easy scheme under GST for small taxpayers. If the annual turnover of your business is less than Rs. 1.5 crore (75 lakhs for North Eastern states and Himachal Pradesh) only then you can opt for the composition scheme.

However, there are some pros and cons of the composition scheme which you must consider before opting for the scheme.

QRMP Scheme

If your annual turnover is up to Rs. 5 crores, you have the option to opt for the QRMP scheme (Quarterly Returns with Monthly Payments). Under the QRMP scheme, a registered person is allowed to furnish their GST returns every quarter along with monthly payment of tax.

Various types of GST forms

GST Basics For Women Entrepreneurs In India

Now, let us discuss some basic forms that you must be aware of.

GSTR 1

Form GSTR-1 is a monthly or quarterly return (based on the taxpayer’s annual turnover) that is required to be filed by every registered person. This form consists of the registered taxpayer’s details related to their outward supplies/sales records.

GSTR 3B

Form GSTR-3B is a monthly or quarterly return (based on taxpayer’s annual turnover) that is required to be filed by every registered person.

This form consists of the registered taxpayer’s summarized details related to their supplies made during the month/quarter along with the details of paid taxes, ITC claimed, purchases under the reverse-charge mechanism, etc.

GSTR 2A

Form GSTR 2A, not a GST return form that one needs to file. It is an auto-generated statement of a taxpayer’s inward supplies, i.e. purchase-related transactions.

It is a read-only (non-editable) form which made available by the government, which has a record of all the invoices received from various suppliers for a given tax period.

GSTR 2B

This newly added GST form is a static statement with details of available Input Tax Credit for the taxpayer generated based on GSTR 1, GSTR 5 and GSTR 6 filed by recipients’ counterparties before the 14th of the succeeding month.

IFF

IFF stands for Invoice Furnishing Facility (IFF). It is an optional facility made available for small taxpayers who opt for the QRMP scheme.

To ease the compliance burden, the system has assigned quarterly frequency to small taxpayers. Taxpayers are required to make the payment in the first two months by a simple challan in FORM GST PMT-06.

GSTR 9 or Annual Return

As the name suggests, the annual return or form GSTR 9 needs to be filled annually once by every taxpayer for appropriate reconciliation and acquiring ITC. The form consolidates the information furnished in the monthly/quarterly returns during the year.

Input Tax Credit

ITC or input tax credit is one of the most important aspects of GST. It is basically the credit that you get back from the tax that you pay on inputs, i.e. purchases.

This is the tax that you as a taxpayer are liable to get back from the government. It certainly brings in a lot of cash flow into any business.

Dealing with vendors

As a business owner, you will have to deal with multiple vendors and suppliers on a day-to-day basis. It is important that you deal with the right of vendors and that your vendors are also GST compliant to maximize your ITC.

If your vendors are not compliant, i.e. they do not file their returns on time, the invoices won’t get reflected, and you will not be able to claim ITC.

In order to help you deal with vendors and know if they are GST compliant, as well as keep track of all the GST due dates and latest updates, you can download the IRIS Peridot App from the playstore.

The app will not only help you know the defaulting vendors, but also help you with all things GST, reducing your dependency on CAs.

E-invoice Applicability

E-invoicing made an entry in India on October 1, 2020, for businesses with Rs. 500 Crore turnover. The latest GST Notification mandates businesses with an AATO of Rs. 5 Cr. to generate IRN from 1st August 2023.

So, if you have received an e-invoice or are anticipating falling under the threshold soon, it is very important to be prepared and understand the basics of IRN generation for ease of doing business.

Recently, the government has authorized 4 private Invoice Registration Portals (IRP) to help businesses generate e-invoices. – IRIS IRP is one of them.

E-way Bill Applicability

Businesses that require transporting goods of consignment value more than Rs. 50,000 mandatorily need to generate an E-way Bill via the E-way Bill System. The EWB can be generated by the consigner, the consignee or even the transporter.

Now, the government has streamlined E-way Bill with E-invoicing. So, you can generate an e-way bill via the Invoice Registration Portal (IRP) along with the IRN (Invoice Reference Number).

Conclusion

In conclusion, understanding GST basics is essential for women entrepreneurs. By knowing how to register, e-invoicing, and comply with GST regulations, they can confidently build and expand their businesses while taking advantage of benefits like input tax credits.

Equipped with this knowledge, women entrepreneurs can thrive, contribute to the economy, and create a more inclusive business environment. With GST as a supportive framework, they can unleash their entrepreneurial spirit and achieve remarkable success.


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Image source: via Fezkes, free and edited on CanvaPro

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About the Author

Meghana Pawar

I am a published Author, a Professional Content and Copywriter, a Writing Coach, and a Certified Yoga Teacher. Apart from teaching yoga and reading, I love to connect with positive souls on social media to read more...

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