Do MSME have to pay GST?

Posted on Friday, July 21st, 2023 | By IndusInd Bank

For small businesses in India, understanding the intricacies of taxation is crucial. The Goods and Services Tax (GST) has been a significant reform in the country’s tax system, streamlining the taxation process and replacing multiple indirect taxes. However, the question arises: Do Micro, Small, and Medium Enterprises (MSME) have to pay GST? In this blog, we will delve into the details of GST applicability for MSME and shed light on the considerations that small businesses need to keep in mind. 

GST Applicability for MSMEs: 

The GST regime has brought most businesses under its purview, including MSMEs. As per the GST law, MSME are required to register for GST if their annual aggregate turnover exceeds the specified threshold limit. The current threshold limit for GST registration is Rs. 40 lakhs for most states in India, except for special category states where it is Rs. 20 lakhs. It is important to note that this threshold limit applies to the total annual turnover and not just the taxable turnover.  

Benefits of GST Registration for MSMEs: 

While GST registration comes with certain compliance requirements, it also brings several advantages for MSMEs: 

1. Legitimacy and Credibility: GST registration lends credibility to your business and enhances its perception among customers, suppliers, and financial institutions. 

2. Input Tax Credit (ITC): One of the major benefits of GST registration is the availability of input tax credit. MSMEs can claim credit for the GST paid on purchases and utilize it against the GST liability on sales. This reduces the overall tax burden and improves the cash flow. 

3. Business Expansion: GST registration is mandatory for businesses engaged in inter-state supplies or e-commerce activities. By registering for GST, MSMEs gain access to a wider market and can expand their operations beyond state boundaries. 

4. Compliance Benefits: GST compliance includes regular filing of returns and maintenance of proper books of accounts. This discipline ensures that MSMEs maintain a systematic approach to record-keeping and financial management, which is beneficial in the long run. 

Understanding GST Composition Scheme for MSMEs 

To ease the compliance burden for small businesses, the government has introduced the GST composition scheme. Under this scheme, MSMEs with an annual aggregate turnover of up to Rs. 1.5 crore can opt for a simpler tax structure with reduced compliance requirements. However, businesses availing of this scheme cannot claim input tax credit. 

IndusInd Bank Current Account: Empowering MSMEs for GST Compliance 

As a small business, managing your finances effectively is crucial for GST compliance. IndusInd Bank understands the unique needs of MSME and offers specialized current account solutions that help streamline your business operations, including GST-related transactions. 

Benefits of IndusInd Bank Current Account 

Tailored Banking for Your Business: IndusInd Bank offers industry-specific current accounts tailored to meet the unique needs of various sectors, including IT/ITes, agro, textile, telecom, shipping, import & export, and more. 
 
Flexible Cash Deposit Limits: IndusInd Bank understands the changing requirements of your business. Our current accounts offer dynamic transaction limits that can adapt to your flexible cash deposit needs today and in the future. 
 
Digital Payment Solutions: Embrace cashless transactions with ease. IndusInd Bank’s current account provides a range of digital payment solutions, including POS devices, QR codes, Soundbox, and Payment Gateway solutions. Accept payments from vendors, channel partners, customers, and more. 
 
User-Friendly Online Banking Portals: Bank conveniently with our user-friendly internet banking and mobile banking apps. Access your current account securely and seamlessly while on the go. 
 
Hassle-Free & Secure Doorstep Banking Services: Enjoy the convenience of premium doorstep banking services with IndusInd Bank’s current account. Benefit from services like cheque pickups, on-call cash pickups, and more, ensuring a hassle-free banking experience. 

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.