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Why Are Small Businesses Struggling to Cope with GST Compliance?

  • Post author:
  • Post published:October 24, 2023
  • Post category:Compliance


 Operating a small business is a formidable task, primarily due to the constraints of limited resources, encompassing financial, time, and staff. These constraints often challenge small businesses to meet the rigorous requirements of Goods and Services Tax (GST) compliance. While the Indian government is working towards streamlining the GST process, the intricacies can still overwhelm businesses. Fortunately, GST filing service providers present a practical solution to assist businesses.

The GST Council, a pivotal regulatory body, has laid specific guidelines for businesses registered under GST. These guidelines encompass various critical aspects of GST compliance, including:

  • Record-keeping: Maintaining accurate records of transactions, financial documents, and relevant data is fundamental to GST compliance. This ensures that businesses can account for their financial activities accurately and transparently, a requirement in the GST regime.
  • Invoicing: The GST Council has prescribed specific rules for issuing invoices, including the format, content, and mandatory information that must be included. Proper invoicing is essential for transparent and compliant business operations.
  • Purchase and Sales Reporting: Businesses must report their taxable sales and purchases comprehensively. This reporting helps the government track tax collections, ensuring that businesses pay their due taxes.
  • Tax Payment: Timely and accurate tax payment is central to GST compliance. Businesses must calculate and remit the correct amount of taxes collected from customers to the government. This requires financial diligence and precision.
  • GST Return Filing: The filing of GST returns is a critical compliance requirement. Businesses must periodically submit detailed returns outlining their financial activities, tax collections, and other essential information. The frequency and type of returns vary depending on the business category.

Adherence to these regulations is collectively known as GST compliance, which is the commitment to following the mandatory GST laws and regulations. Non-compliance with these norms can result in severe penalties and fines imposed on a business.

Navigating GST Compliance with Expert Assistance

In essence, GST filing service providers offer businesses a practical solution to navigate the complexities of GST compliance. These providers are equipped with the expertise and tools required to streamline GST-related processes. They help businesses maintain accurate records, ensure proper invoicing, report purchases and sales, facilitate tax payments, and aid in the timely filing of returns. This support allows businesses to concentrate on their core operations and growth, confident in their compliance with the stringent GST laws.

Small businesses often grapple with the challenges of GST compliance due to limited resources and the complexities involved. The government’s efforts to simplify the GST process are commendable, but many businesses still require assistance. GST filing service providers offer a practical and efficient solution, ensuring that businesses meet their compliance requirements while focusing on what they do best: growing and thriving in a competitive business environment. These service providers play a pivotal role in facilitating the adherence to GST laws and regulations, ultimately contributing to transparent, accountable, and efficient business operations in India.

GST Compliance Rating

The GST compliance rating is a government-issued score that assesses a business’s adherence to GST compliance standards. This rating applies to all entities subject to GST, regardless of their characteristics, scale, or revenue.

In accordance with legal requirements, to qualify for the input tax credit on their purchases, buyers must accurately report all transactions in which they have paid GST to their suppliers. Notably, a supplier’s higher compliance score enhances the likelihood of the buyer successfully reclaiming input tax credit. In essence, this system encourages businesses to maintain strong compliance practices and fosters a more transparent and accountable GST ecosystem.

GST Compliance

A GST compliance checklist is a crucial tool to help businesses adhere to India’s ever-evolving GST regulations. While these compliance requirements are subject to ongoing updates and government-imposed standards, they can be broadly categorized into three key areas, each demanding specific attention and adherence:

  • Registration Compliance: This aspect of the GST compliance checklist focuses on the correct and lawful business registration under the Goods and Services Tax (GST) regime. It requires businesses to obtain a valid GSTIN for Goods and Services Tax Identification Number. This unique identification number is fundamental to conducting business transactions GST-compliantly. It ensures that the business is legally recognized under GST and can engage in activities such as collecting and remitting GST to the government.
  • Tax Invoice Compliance: Proper issuance of tax invoices is a critical component of GST compliance. Businesses are required to adhere to prescribed guidelines for creating and issuing these invoices. The guidelines cover essential aspects, including the format of the invoice and the mandatory information that must be included, such as the GSTINs of the supplier and the recipient, the nature of the transaction, the applicable tax rates, and other essential details. The accurate and complete preparation of tax invoices is vital not only for regulatory compliance but also for enabling recipients to claim input tax credits.
  • Return Filing Compliance: Timely and accurate filing of GST returns is a cornerstone of GST compliance. The return filing process involves businesses providing the government with details of their taxable sales, purchases, and taxes collected and paid during a specific period. The frequency and type of returns to be filed may vary depending on the category and nature of the business. Non-compliance with return filing obligations can result in penalties and legal consequences.

While these three areas constitute the core of a GST compliance checklist, it’s essential to recognize that specific compliance requirements may vary based on the nature, size, and operations of the business. Therefore, businesses should consider seeking guidance from a GST specialist. These experts can provide detailed insights and personalized guidance tailored to the specific circumstances of the business, ensuring that it remains compliant with GST regulations. Such specialized guidance not only helps businesses fulfil their compliance obligations but also enables them to navigate the complexities of GST more effectively, ultimately contributing to smoother and more efficient business operations.

Challenges in GST Compliance for Small Businesses: Financial Constraints

Small businesses face significant challenges in coping with GST compliance, and several factors contribute to their struggles.

Financial Constraints: Small companies often operate with limited budgets, leaving them with little financial flexibility. In response to these constraints, many new businesses may opt to cut costs on accounting resources. Shockingly, research indicates that over 50% of small businesses do not have a dedicated bookkeeper or accountant. This lack of professional financial expertise is a major contributor to the challenges faced by more than 89% of small businesses in achieving GST compliance. To address this issue, it’s crucial for small businesses to recognize the importance of hiring a skilled and well-trained bookkeeper. If budget constraints are a concern, outsourcing accounting services to an affordable service provider can be a viable solution to ensure proper GST compliance and financial management.

Insufficient Taxation Expertise: Small businesses often grapple with GST compliance because they lack the necessary expertise in handling taxation matters. This knowledge gap becomes even more challenging when financial limitations prevent them from hiring in-house professionals to manage these complex issues. Small enterprises tend to be highly focused on their core business activities, as they lack the resources, both in terms of time and finances, to delve into the intricacies of tax compliance.

It’s a widely acknowledged fact that small businesses must prioritize activities that directly contribute to their growth. While compliance with taxation regulations is undoubtedly crucial, it can be an intricate and time-consuming endeavour. Small businesses, therefore, opt for pragmatic solutions to balance these competing demands. This is why many of them turn to comprehensive GST services, like those provided by Kanakkupillai, which offer expertise and support in managing GST compliance efficiently, allowing small businesses to concentrate on their core operations and growth.

Lack of Adequate Tools: Every taxpayer in India must adhere to the government’s GST compliance requirements. However, not all small businesses have the luxury of possessing the necessary tools to create, manage, and record invoices, which are crucial for meeting these compliance standards.

To address these challenges and to empower small businesses with the tools and knowledge they need to navigate GST compliance effectively, service providers like Kanakkupillai play a crucial role. Kanakkupillai offers comprehensive GST services that include expertise, guidance, and support to help small businesses achieve and maintain GST compliance efficiently. By partnering with a service provider like Kanakkupillai, small businesses can focus on their core operations and growth while the service provider takes care of the intricate details of GST compliance.


In conclusion, GST compliance can be complex and challenging, particularly for small businesses with limited resources. However, it’s a necessary aspect of conducting business in India. Kanakkupillai provides a valuable solution for businesses navigating the complexities of GST compliance. With their expertise and support, small businesses can efficiently meet GST requirements while concentrating on their primary objectives, ultimately ensuring growth and success in the dynamic Indian business landscape. For assistance and guidance in achieving GST compliance, reaching out to Kanakkupillai is not just an option but a strategic move for small businesses.



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