GST for Small Business: Complete Guide to Compliance & Benefits

Key Insights

1. Low GST attracts customers because they pay less for the same product, and you can sell more.

2. Consumers can buy items such as electronics and commercial vehicles at a lower price, which supports your company's growth. 
    
3. In this blog, you will learn how GST saves your money and benefits customers, the new rates, and how you can focus on growing your venture.

The Goods and Services Tax (GST) is a suitable indirect tax charged on the supply of goods and services across India. 

Let's take the Akku example, comparing Old GST vs New GST for small businesses:

Akku explained to his friend how the new GST rules benefit them. "Before, we had multiple rates; now, it's simplified. 

Look at this comparison.
 

Akku came to the conclusion that some items increased in price, but the majority of necessities are more affordable to small businesses in India.

This blog helps you understand GST for small businesses, and the next topic is What is the impact of the new GST slab on FMCG small businesses.

How does the new GST slab affect small FMCG businesses?

The fixed GST slab has a significant impact on small FMCG businesses, changing product pricing and consumer demand. 

Let's take an Aman Example, who is a Small Businessman:

Aman, who runs a local grocery store. He told his wife, Priya, "See, GST is decreased on so many FMCG products we sell. This means we can lower our prices, and more customers will come to buy from us instead of the supermarkets!"

He showed her a table comparing the old and new rates on key items:
 

Aman noticed that the government is helping to lower the prices of everyday items. With the tax cut from 12% and 18% to just 5%, his store can now offer better prices. 

Lower prices may reduce profit margins, but they can increase sales volume and improve cash flow for small shop owners like Aman, benefiting small electronics businesses.

How does the new Electronic GST work for Small businesses?

The new electronic GST (e-GST) makes it more comfortable for small businesses to manage their tax responsibilities by providing a simple online portal.

Let's understand how the impact on small businesses like Ramesh:
 

Ramesh runs a small electronics repair shop, selling refurbished devices. He shared with a customer how the new GST rates are making electronics cheaper. "The government has cut taxes on many items, so you pay less and I can sell more".

He explained, using a simple table to show the changes.
 

Ramesh believes that the tax cut, which lowers the tax rate from 28% to 18%, is a significant advantage for his small business. 

Plus, the lower input tax helps his cash flow, and he pays less GST when buying stock. Overall, it makes handling his business finances easier and more efficient.

This change is similar to what we've seen in the automobile industry. Next, we should examine how these changes are impacting small auto businesses.

Bonus Tip: As of the year 2025, the typical deadlines for submitting GST returns are the 11th and 20th of the following month. However, it is advisable to verify the specific dates on the GST portal each month, as they may be subject to change due to weekends or official notifications.

How does the new Automobile GST work for Small businesses?

The new automobile GST structure reduces tax and increases rates on several vehicle categories, lowering acquisition costs for small businesses.

Let's see Shikhar's example, who runs a small business:

Shikhar runs a small logistics company and sees a big opportunity with the new GST rates. He says, "The lowered GST on commercial vehicles means I can buy another truck without spending a fortune. This will help my business grow and manage more delivery orders effectively."

The following table highlights the key changes in GST rates for automobiles that benefit small businesses:
 

The table shows a significant drop in the GST rate from 28% to 18% for essential vehicles that small businesses use. 

So whether he's getting a small car for meetings, a fleet of motorcycles for deliveries, or a commercial truck, it's now much more affordable for a small business. 

Now that you understand how the new GST slab affects small businesses, the next step is to conclude this blog.

Bonus Tip: If you want 350cc or larger two-wheelers, you have to pay 40% GST, which will be regulated as of 22 September 2025.

Benefits of GST Simplification for Small Businesses

The new GST rates are important because they directly improve India's tax system, making it easier and more equitable for all. By justifying tax slabs, they aim to strike a balance between social equity and economic growth.

• The government, small businesses, and consumers all benefit from the clarity and efficiency that the changed GST rates provide to India's indirect tax system.

• For small businesses, having fewer tax slabs simplifies invoicing, minimises disputes, and streamlines compliance, making operations more efficient and hassle-free.

• For consumers, this clarity means less confusion over why similar products might be taxed differently, ensuring that essential goods remain affordable and not burdened by excessive taxes.

All parties involved in the economy benefit from the simplification of taxes through these updates, which also ensures equity, facilitates compliance, and maintains revenue. 

Conclusion 

We trust this overview of GST, from your local kirana shop to a new truck on the road, has been beneficial for you over time. The aim is to simplify your life, enabling you to make more profit from the same product and expand your business. 

Keep in mind, grasping these regulations is the initial step toward leveraging them to your advantage. Here’s to reducing complexity and increasing capital for your enterprise.

FAQS 

How does the new composition scheme benefit a micro-business?

The revised scheme offers a much higher threshold of ₹1.5 crore (₹75 lakh for some states). It simplifies compliance with quarterly filings instead of monthly ones and offers lower tax rates (e.g., 1% for manufacturers), significantly reducing your compliance burden and cost.

I supply both goods and services. How do I calculate my aggregate turnover for GST?

You must add the value of all taxable supplies, exempt supplies, exports, and interstate supplies of both goods and services. This total determines your eligibility for the composition scheme or mandatory registration.

What is the new GST rate for my product?

Many everyday items, such as pre-packaged food, dairy spreads, and certain household goods, have seen reductions. For the most accurate, updated rate on your specific product, use the GSTIN lookup tool on the GST portal or consult your CA.

How does the new 18% slab for small cars and commercial vehicles benefit me?

This significant reduction from 28% lowers the upfront cost of purchasing vehicles for business use, like delivery vans or cars for transport, improving affordability and ROI for small businesses.

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About the Author

LoansJagat Team

‘Simplify Finance for Everyone.’ This is the common goal of our team, as we try to explain any topic with relatable examples. From personal to business finance, managing EMIs to becoming debt-free, we do extensive research on each and every parameter, so you don’t have to. Scroll up and have a look at what 15+ years of experience in the BFSI sector looks like.