Implementation of the Goods and Services Tax (GST) is one of the historic tax reforms that helped eliminate multiple taxation systems. As Small and Medium Enterprises are brought under the scope of GST, this would increase the taxpayer base in the country. 

SMEs are considered the primary growth drivers to the Indian Economy by contributing nearly 40% of India’s total export and 50% industrial output. However, most small business owners were anxious about this tax reform considering its impact on compliance procedures. 

Let’s take a look at some of the positive impacts of GST implementation for small and medium enterprises:

Positive impacts of GST

  • Ease of registration

Previously, various tax rules prevailing in the different states in India had made the registration process complicated for SME operations across India. Now, with the implementation of GST, the registration is online and centralized, making the entire process easy for SMEs. As there is no requirement for VAT registration (which differs from state to state), entrepreneurs can launch their business and set up a company through a simplified GST process with no delay.

  • Simpler taxation process and enhanced compliance

GST council has increased the GST threshold turnover under the composite scheme from INR 75 lakhs to INR 1 Crore. The Indian Government has also eased the tax filing process for SMEs with a turnover of INR 1.5 Cr. with quarterly frequency instead of monthly. 

Also, SMEs are not required to deal with the multiple taxation system as GST has wiped out all the cascading taxes making the entire taxation process simpler with a reduced tax burden. Tax compliance is enhanced and effortless for small and medium enterprises to eliminate the distinction between goods and services. Compliance related to every procedure, including registration, payments, refunds, and returns, can be effortless for SMEs. 

  • Hassle-free logistics

With the introduction of GST, there is no entry tax on goods sold anywhere across the country. It will boost the movement of goods across India and result in hassle-free logistics for small businesses’ goods, thereby reducing the logistics cost.

  • Easy access to nation-wide market

As there is no distinction between goods and services, there will be easy access to the common nationwide market without working on state-wise tax management for the business. Small businesses can quickly expand their business with simpler and minimal compliance requirements under the GST. One tax & one market concept brought under the GST makes it easier for small businesses to explore the common market across nations instead of limiting it to its original state. Interstate sales will not be an expensive affair for small businesses. 

Now that businesses entities are mandated to be registered under GST and avail GST identification number as per the CGST Act of 2017.

What is GSTIN? What is the State Code under GST?

Taxpayers/businesses registered under the GST would receive a 15-digit alphanumeric unique identification code. This code displayed on the registration certificate is referred to as the Goods and Services Tax Identification Number (GSTIN). GSTIN code represents origin state, PAN number, and nature of business, etc. First, the two digits of GSTIN represent the state code. The state code helps in identifying the location and the area of operation of the business entity. 

GST State Codes

Here is a list of GST state codes. There are also alphabetical codes. 

SL Number Name of State State Code (GST) Alpha Code
1 Andaman and Nicobar Islands 35 AN
2 Andhra Pradesh  28 AP
3 Andhra Pradesh (new) 37 AD
4 Arunachal Pradesh  12 AR
5 Assam 18 AS
6 Bihar 10 BH
7 Chandigarh  4 CH
8 Chattisgarh  22 CT
9 Dadra and Nagar Haveli  26 DN
10 Daman and Diu  25 DD
11 Delhi 7 DL
12 Goa 30 GA
13 Gujarat 24 GJ
14 Haryana 6 HR
15 Himachal Pradesh 2 HP
16 Jammu and Kashmir 1 JK
17 Jharkhand  20 JH
18 Karnataka 29 KA
19 Kerala  32 KL
20 Ladakh 38 LA
21 Lakshadweep Islands 31 LD
22 Madhya Pradesh  23 MP
23 Maharashtra 27 MH
24 Manipur 14 MN
25 Meghalaya 17 ME
26 Mizoram 15 MI
27 Nagaland 13 NL
28 Odisha 21 OR
29 Pondicherry 34 PY
30 Punjab 3 PB
31 Rajasthan 8 RJ
32 Sikkim 11 SK
33 Tamil Nadu 33 TN
34 Telangana 36 TL
35 Tripura 16 TR
36 Uttar Pradesh 9 UP
37 Uttarakhand 5 UT
38 West Bengal 19 WB

Know your GST Jurisdiction

Central Board of Indirect Taxes allows business entities to know the GST jurisdiction. If there are any disputes regarding payment of credits or any other related matters, taxpayer business entities can reach jurisdictional officers. Here is a simple procedure to follow to know your GST jurisdiction.

  1. Log on to the Central Board of Indirect Taxes-GST website
  2. Click on the ‘Know your jurisdiction’ tab 
  3. Once the screen opens, select your state from the drop-down menu
  4. Once you choose the State, you are required to select the ‘zone’ 
  5. Upon selecting the division, the jurisdiction range will be populated on the screen.
  6. You can then know your accurate GST jurisdiction and get detailed information.

Knowing your jurisdiction provides you with a lot of transparency and gets your grievances addressed efficiently. Besides knowing the GST jurisdiction, taxpayers can get their various issues addressed on the GST self-help portal.

Conclusion

GST has various positive impacts for small and medium enterprises with numerous benefits, ease of use, digital and simplified processes. Many aspiring entrepreneurs can give wings to their ideas and launch their businesses with ease. Small business owners can focus on expansion and growth plans with easier accessibility to the nationwide market without concentrating more on state-wise tax minimization strategies. 

Payment platforms or solutions in India like Razorpay help you grow your business with ease.  The platform gives you an option to create GST-compliant invoices to improve payment cycles and achieve overall business efficiency.

Author

An avid football fan and a Fintech enthusiast.

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