Questions Regarding Amazon Business and GST.

[Hachune]

Hello Guys and Gals,

We have a family owned small shop that sells hardware items (tools and such) started by my parents and still pretty much run by them. We are still running the business in a very traditional manner, no GST registration, no proper records of transactions etc. Since it's a very small shop, there has been no issues most of the time. The thing is, there are many items that our supplier sometimes do not have, I usually just buy these items online from Amazon, Moglix etc., and I have been curious about Amazon business as they seem to have many good offers. I tried registering for it but requires a GSTin which I obviously do not have at the moment.

So, I am wondering if I should register for GST? I know very little about it and its implications. Even though I really want to register for it and then register for Amazon business, I am afraid that there might be something that I do not understand and makes things more difficult. The sentence hollywood use a lot of times saying "Humans are afraid of something they do not understand" holds very true for me here. I don't know anything about taxation, so here are my questions :

1. When do I have to pay tax to the Government?
2. How often do I have to?
3. Does the amount of tax I pay depends on the amount of sale/purchase I made?
4. As I said, we don't keep proper records of sale/purchase transactions so will there be an issue?
5. Will registering for GST be better or worse than how we run the business currently?

These are the questions I really want to know the answers for but I honestly don't know where else to ask, so I am just asking here as I believe some people are really experienced in the matter. Also, I should mention that I am from the North-East and belong to a Scheduled Tribe, we don't pay income tax in case that matters for the above questions I asked. Thanks a lot for reading and have a nice day.

 

[gourav]

What would be the approximate turnover of your shop? You can opt for GST composition scheme where you can pay a flat GST of 1% on your total sales (no input credit). This would also mean that you'll not get the benefit of input credit on buying from Amazon though.

If you do not want to avail the composition scheme, you'll have to start maintaining records and filing returns in timely manner. Given the nature of the business, I'm assuming you'd have a lot of purchases from unregistered suppliers. This introduces additional headaches as you become liable for paying GST on their behalf (reverse charge).

Keeping the above in mind, I'd recommend talking to a CA who deals in indirect taxes. I suppose you'd already have an auditor for the business. You can try talking to them. If not, just find a chartered accountant who deals with small businesses in your area.

 

[Hachune]

What would be the approximate turnover of your shop?

I honestly have very little idea as I do not run the business myself, but I would say 10-20 lakhs.

You can opt for GST composition scheme where you can pay a flat GST of 1% on your total sales (no input credit). This would also mean that you'll not get the benefit of input credit on buying from Amazon though.

Reason why I want Amazon business is mostly for the decrease in price with increasing amount purchased. The business account specific coupon codes and discounts.
I will have to read about the GST composition scheme.

If you do not want to avail the composition scheme, you'll have to start maintaining records and filing returns in timely manner. Given the nature of the business, I'm assuming you'd have a lot of purchases from unregistered suppliers. This introduces additional headaches as you become liable for paying GST on their behalf (reverse charge).

I would assume they are registered as they are usually very big businesses. But yea, I can't really be a 100% sure.

Keeping the above in mind, I'd recommend talking to a CA who deals in indirect taxes. I suppose you'd already have an auditor for the business. You can try talking to them. If not, just find a chartered accountant who deals with small businesses in your area.

Yea I really need to talk to someone who is well informed about taxes. I should also mention that our shop itself is in a small countryside (where I am from) and I am pretty sure non of the shops there are registered either. Anyway, thanks a lot for the detailed answer. It really helps!

 

[nRiTeCh]

4. As I said, we don't keep proper records of sale/purchase transactions so will there be an issue?

Then how do you even know how much profit you earned for a specific period?

 

[Hachune]

Then how do you even know how much profit you earned for a specific period?

Laugh if you want but we don't. Not the exact amount anyway. As long as the selling price is more than the cost price, there should be some profit XD

 

[gourav]

Then how do you even know how much profit you earned for a specific period?

A lot of cash businesses like these don't know the exact amount they're earning. They need to ensure two things:

• Sale price is higher than cost
• There's enough money in the register to pay for all the purchases

The remaining money is usually taken out of the business.

I would assume they are registered as they are usually very big businesses.

If this is the case, then you can definitely look for registration.

 

[Hachune]

then you can definitely look for registration.

Thank you very much. I will look into it.

 

[Emperor]

first check if after taking GST Number & Accountant Service to file returns & lots of billing/paper works (headache if you didn't computerized all and prefer manual) etc. and after that there left decent profit for you. If running business traditionally and earning good with peace of mind than do not get lure with Amazon profit/GST

 

[gourav]

first check if after taking GST Number & Accountant Service to file returns & lots of billing/paper works (headache if you didn't computerized all and prefer manual) etc. and after that there left decent profit for you. If running business traditionally and earning good with peace of mind than do not get lure with Amazon profit/GST

I concur with this.

If you were starting a new business, I'd totally recommend GST registration. But for a running business, which is being run by your parents, you might want to consider the additional burdens this will add. Return filing would be required every quarter.

 

[Hachune]

Thanks for the input guys. I thought about it too last night, it would be difficult to get my parents to maintain proper records and on top of that, digitalising it for someone who barely knows how to use a mobile phone would be impossible.

Just another reason why I wanted to register is I felt like the time will eventually come when I need to do it anyways to stay competitive, the shop small as it is have had a lot of dealership offers for example. I however will back out from the idea for now as you suggested.

 

[n1r0]

Would applying for a GSTin under your name help? Your parents can continue their business as usual without registering as the annual turnover is less than 40 lakh.

You would buy stuff from Amazon via "your company" and sell it to whoever needs it, with a GST bill and proper records. In time you can absorb the family business and clients.

 

[Hachune]

Would applying for a GSTin under your name help?

Everything is in my name yes, even if I register for GST, it would be in my name. That's not a problem.

You would buy stuff from Amazon via "your company" and sell it to whoever needs it, with a GST bill and proper records. In time you can absorb the family business and clients.

One of the main issue is I basically am living elsewhere, I am home mostly only on holidays. Even if I register it in my name, I cannot run the shop myself.