Impact of GST on Small Businesses: How New Rules Are Reshaping the Landscape
The Goods and Services Tax (GST) was introduced in many countries to replace complex tax structures with a single unified tax.
One of the key impacts of GST is the simplification of the tax system. Small businesses now deal with a single indirect tax on goods and services instead of multiple state and federal taxes
GST has led to improved transparency in business transactions. With the introduction of digital invoicing and the requirement for businesses to upload invoices, the system has reduced opportunities for tax evasion
Small businesses can now claim an input tax credit for taxes paid on purchases and services. This helps reduce the cascading tax effect
The implementation of GST has encouraged the digitalization of small businesses. Filing GST returns online, maintaining digital records, and using accounting software are now mandatory for many businesses
While the GST system allows for tax credits, the timing of tax payments versus tax credits can affect small businesses' cash flow.
Despite simplification, GST compliance can still be complex for small businesses. Many small entrepreneurs struggle with understanding GST laws