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Understanding GST Rates for MSMEs
Posted on Monday, July 24th, 2023 | By IndusInd Bank
India’s entrepreneurial landscape has witnessed a remarkable surge in recent years, with young businesses emerging as powerful contributors to the nation’s economic growth. The government’s focus on promoting and supporting Micro, Small, and Medium Enterprises (MSME) has played a pivotal role in fostering this entrepreneurial spirit. One key aspect that affects the financial health of MSMEs is the Goods and Services Tax (GST) regime. In this blog post, we will delve into the world of GST and explore the applicable rates for MSME, highlighting the importance of effective financial management for their sustenance and growth.
Understanding GST:
GST is a comprehensive indirect tax levied on the supply of goods and services throughout India. Introduced on July 1, 2017, GST replaced multiple cascading taxes such as VAT, excise duty, and service tax, streamlining the taxation system and reducing complexities. Under the GST framework, businesses are required to register and comply with various rules and regulations.
GST Rates for MSMEs:
The GST rates applicable to MSME vary based on the nature of your business and the category to which it belongs. The GST Council, responsible for administering GST, has classified goods and services under various tax slabs, primarily 0%, 5%, 12%, 18%, and 28%. It is essential for young businesses to understand the applicable GST rates to ensure accurate compliance and avoid unnecessary tax burdens.
Most goods and services fall under the 18% GST slab, including essentials like cement, steel, and household items. However, specific sectors receive more favorable rates to promote growth. For instance, if you are a small manufacturer with an annual turnover of up to INR 40 lakh, you can opt for the composition scheme which levies a lower rate of 1%. Similarly, restaurants and eateries enjoy a reduced GST rate of 5%. The government continually reviews and revises the GST rates to encourage the growth of MSMEs and simplify the tax framework.
While understanding the GST rates for MSME is crucial, effective financial management goes beyond tax compliance. If you run a small business, then managing your finances diligently is crucial to ensure sustainable growth and profitability. IndusInd Bank Current Account can be a valuable asset in managing your finances and facilitating the growth of your small business. Here’s how:
1. Tailored Banking Solutions: IndusInd Bank offers current accounts specifically designed to cater to the unique financial needs of your business. These accounts come with a range of features and benefits that are relevant to small businesses, providing them with the necessary tools to manage their finances efficiently.
2. Seamless Digital Banking: IndusInd Bank Current Accounts offer seamless digital banking capabilities, allowing you to access your account, make transactions, and manage your finances conveniently from anywhere, at any time. This empowers your business with the flexibility and convenience it needs in today’s fast-paced digital world.
3. Multiple Banking Channels: With IndusInd Bank Current Account, you can enjoy access to a wide network of banking channels. These include online banking, mobile banking, phone banking, and a vast network of branches and ATMs, ensuring easy and convenient banking services for businesses across India.
4. Value-Added Services: IndusInd Bank provides a range of value-added services that can benefit your business. These services may include cash management solutions, trade finance facilities, working capital finance, foreign exchange services, and more. Such offerings will help you in streamlining your operations, improve liquidity, and enhance your overall financial efficiency.
5. Dedicated Relationship Manager: IndusInd Bank assigns a dedicated relationship manager to each MSME account holder. This personal touch ensures that your business receives customized support and expert guidance in managing your finances effectively.
That’s not all! You also enjoy transparent fee structure, nominal minimum balance requirement, instant account opening through Video KYC, and a range of banking services and features which make it a favored option for businesses seeking convenient and efficient banking solutions.
Open IndusInd Bank Current Account, NOW!
Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.