Today I sat with a small biz owner to figure out why he wasn't earning enough from his business. Turns out he wasn't accounting for GST twice (you need to do that if you are buying and selling forward as a trader).
Calculating GST amount itself on total invoice value is a nightmare when you account for other things like figuring out HSN-wise tax rates and logistics. And then splitting into two for state and central tax.
And he's still educated but weak at math and accounts. I can only imagine how much the average business owner struggles with their own accounting. Heartbreaking stuff.
Ok. But why is GST a shit show ?
There should be a flat GST rate like other countries, for starters. That alone will reduce like 60% of problems and fast track liquidity.
Flat GST is a different debatable topic , even if done. the small biz owner who u r referring to will continue to do the same thing .
It is about educating self before doing business , GST could have its own flaws , this cannot be the reason to call it a shit show
BTW small businesses can exempt form GST provided below some threshold
Hire a CA to do all the GST. I know its an additional expense but much needed. As a small business owner, you don't need to put time paying penalties.
Bro, hiring a CA is what most people do and what the problem is. If business owners don't understand how taxation works then they end up working for break even or even losses especially when their margin is thin.
I get your point & you are right. I am not saying you don't need to understand it. That you anyways have to learn it but day to day hassle need to be left with experts so that as a business owner you can focus on your core work. Hire a part time accounts person which is also a great option.
Ain't there sw to solve such problems?
Like khatabook and cleartax etc
They are okay for generalised stuff but not very customisable to your needs from what I know
Even if we customise these people will not pay a penny. They will be ready to suffer than use a software.
They fear all their cash becoming white and reduced profits.
GST is one bit, imagine all the tax payers with no taxation knowledge. And system doesn't even help a bit
System not helping is one of the major factors yes
When you get sick you can take medicines yourself. But it's better to consult a doctor.
Same with taxes. Practicing CAs have a license. You can't become one via apprenticeship/bootcamp/college education.
While taxes and death are the only two certain things in life, it's an expense that you need to account for.
Most small business owners don't pay GST. They just file below 25 lakh sale and chill. Someone with over 25 lakh "declared" sales in not small business in India.
That 25 lakh limit is on total/lifetime sales. Easy enough to cross in a few years for any decent businessman.
Quite sure that is incorrect. https://www.a2ztaxcorp.com/gst-vat/gst-recent-news/annual-turnover-threshold-for-gst-set-to-be-rs-25-lakh/
Cant agree more . My father had a Manufacturing MSME with a turnover around 40-50 LPA. The taxation headache was so much after GST that every month CA had to be paid what we use it to pay him every 6 months. And lot of other overhead too with GST, fortunately he closed the shop before covid due to other reasons too and avoided a huge loss.
I would say he timed it very well, covid inflation and shocks shut many good businesses across industries. GST was an underlying problem for many of them if I'm not wrong. Most people wouldn't realise it as long as they have more than 10-15% net margins, cash flow gets managed. But when margins become thin, GST and CAs become a bigger problem and expense compared to other factors.
I would say GST related expenses and penalties alone would factor anywhere between 3-10% on gross revenue (depending on industry and other factors), not counting the actual GST paid on revenue, for a lot of msmes. Even tax portal goes down around deadlines 🤦🏻♂️
Wasn't there memes on gst on paratha vs gst on roti, It might have actually been designed to keep babus and middlemen, afloat. I'm no economist but why they keep so many clauses.
Uparwala jaane
Wow perhaps the real ed tech that needs to be made is to teach business people how to do business
Thanks for sharing
There already are so many free resources, that's where I learnt from as well, plus watching shark tank and dragons den from different countries.
But there's very few that will teach you nuances of your own industry. Everyone's trying to sell a course to get to xyz, not actual education that can prepare them for actual business. Plus there are contextual and situational challenges as well that can't be accounted for. Shit just happens.
One of my friends was doing a profitable and growing laundry business which got killed because of demonetisation for ex.
That's why I try to mentor people and tell them what mistakes to avoid and what to prepare for, from my own experience and that of others.
Up until now Zepto was known for product dark patterns. Now they are coming up with random GST rates too 0.59/11.99 == 4.92% Are they now subsidizing GST too? This is day light robbery folks
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