What Can SMEs in India Do To Financially Stay Afloat During The Lockdown?

The COVID-19 pandemic is an unprecedented disaster across the globe. Every human on the planet has been affected in some way or the other, personally or professionally. Businesses everywhere are losing money and are being forced to shut down, and a record number of people are filing for unemployment.

Indian businessmen are facing the same situation, with very few of them having alternative means of income. SMEs (small and medium enterprises) in India need to pull through during this lockdown and gear up for the period afterwards. This article focuses on how such businessmen can make use of the GST schemes and software to help them in this period.

Why is GST Important?

The GST (Goods and Services Tax) Act was adopted by India in 2017 to bring about a uniform, transparent, simpler, and faster taxation system across the country. GST and the several amendments made to it have significantly affected the economy and your lives, as a producer and a consumer.

GST is important because the government needs tax money to carry out various activities in all the sectors. At the same time, several concessions have been made for small businessmen, which are especially useful in a crisis like this.

GST Exemptions

If you are a businessman or supplier with an annual aggregate turnover below a certain threshold (INR 40 lakhs for businesses, 20 lakhs for suppliers, and 10 lakhs for the north-eastern states), you are exempt from paying GST. If you are a taxpayer with a turnover of under 1.5 crores, you can also avail the GST composition scheme, which lets you pay taxes at a nominal rate. However, e-commerce businessmen have no exemptions irrespective of their turnovers.

Online Businesses

If your business is online, you are not exempted from GST; you have to register yourself on the GST portal, fill in all your business details, and get a unique GSTIN number. The GSTIN is a 15-digit number, which is of the form GST state code-PAN number of the trader/manufacturer-entity number-an alphabet (“Z” by default)-check code.

However, if you are an online businessman during this pandemic, your business is thriving when brick-and-mortar shops are shut down. Delivery of goods from online retailers is crucial at this stage. Moreover, you are more likely to be familiar with technology and digitisation than an SME businessman, which is another change the GST Act has brought about.

Influence of Technology

As India moves towards a digital and cashless economy, a lot of SME businessmen are left behind since they are unlikely to adapt to the technological shift. All processes related tot he GST: registration, payment, and filing of returns, have to be done online.

If you are a small businessman who is new to technology, luckily, some companies have launched platforms which aid you to go digital. GST software applications also help you with maintaining clean records of all payments and inventory, and creating and sharing invoices, all of which make it easier to manage your business. The best GST software applications are secure, have a fast and user-friendly interface, and automatically update based on the latest GST amendments.

Starting a New Business

In these trying times, small businessmen are on the lookout for new job opportunities. Some of the more ambitious ones are trying to start a new business based on the need of the people and the country now. For example, if you are a garment shop owner or a tailor, you can (temporarily) change your business to focus on making masks.

In this era, startups are everywhere, and it is important to come up with new business ideas when you know your old one has failed. The GST scheme also encourages startups by having a centralised registration process, offering exemptions based on turnover, and asking them to pay taxes on a quarterly instead of a monthly basis.

Conclusion

You are understandably under a lot of economic pressure during this lockdown as an SME businessman, but it is important to use this time well to get ready for what comes after. Learn about how you can take your business digital, how you can use technology to your advantage, and about the various GST schemes and software aides (like GSTIN search, billing software, payment portals etc.) so that you are ahead of the curve when normalcy resumes.