How Will GST Affect My Kirana Store?
After the announcement of the Goods and Services Tax, also known as GST, in the middle of 2017, the kinetics of business in India is completed changed. It has a major impact on all types of businesses, but the topmost concern was small-scale businesses. Because the ones who invest in small-scale businesses are those who have very few resources, and these are the ones who are affected drastically by a change in the dynamics of the business in India. It may cause a lot of trouble not only in their business but also in their lives. Kirana shop is one of those small-scale businesses which is affected deeply. Even in the worldwide pandemic, the shops are open only to help us to stay safe in the house and be healthy by risking their own lives.
Even there are many branded supermarkets in almost all the cities, and these Kirana stores are ones which helps us in much needed times and emergencies by providing their best quality. But with the introduction of this Goods and Services Tax, theseKirana stores are ones that are almost ruined. There is a drastic increase in invoicing, record keeping, and return reconciliation that still remains puzzled even after many years of implementation of the rules.
After the introduction of GST, the following are the things to be implemented by Kirana store owners:
- If the turnover per year exceeds 40 lakhs, then it is compulsory for Kirana store owners to get GST registration.
- They should also go for a composition scheme called GST composition scheme if turnover per year less than 1.5 crores. All small-scale traders with business should pay one percent tax on the net turnover rate.
- One yearly return and four quarterly returns are part of the composition scheme, which makes a net total of five returns. So, they are required to pay one percent of the turnover rate every quarter of the year. Here GST should be paid from their own pocket means owners cannot take the credit of GST, which was paid by then, and it is not possible to recover from others.
- Finally, coming to the normal GST returns, three monthly returns and one yearly return are to be paid by Kirana shop owners, which makes a net total of 37 returns. Here, owners can take the credit for GST, and no need to be paid from their own pocket.
Challenges for Kirana store owners:
- Rise in tax amount: With the introduction of Goods and Services Tax, every product line has become more uniform, but there is a burden due to an increase in major product rate. Also, the Time value of money indicates that money which is gained today is more worth than that obtained in the future.
- Burden in the compliance: Owners should maintain a proper account, including paperwork and also the date compliance for paying three returns per month. If any of the returns is missed, it will create difficulties for the owner.
- Not much advanced in technology: Generally, in Kirana stores, a process of billing in books along with their carbon copies is followed. By making bills digitalized, it has become difficult for many owners to stay updated with technology to maintain their GST records.
- Knowledge in Commerce: Kirana store owners usually follow the old taxing systems for their profit. With the introduction of Goods and Services Tax, it has become difficult for them to understand and implement these systems. If they are not smart enough to work it out, they can be issued as tax fraudulent.
GST is a Boon or bane?
Goods and Services Tax was imposed at midnight on July 1, 2017. Before the introduction of GST, it was an easy process for Kirana store owners. Even many stores do not have VAT registration because they are selling their products to purchasers who unlikely asks for any invoice. VAT which was paid for buying from dealers, is the only tax they were paying. This includes many loopholes, and rarely do officers visit and seize products of stores that do not have VAT registration. By the introduction of GST, everything has fallen into place.