Najdiki Fayda – Myopia

GST is required only if my turnover is above Rs. XX Lakhs ! Popular thoughts.

We happened to meet an entrepreneur recently at Islampur near Kolhapur. He has bought a manufacturing set up of a unit in Mumbai, which was on sale because its outgoing owner was relocating permanently to another Kolkata. He shifted the machines to his hometown Islampur.

He has been happily doing the business since last 6-9 months. Even during Corona slowdown he was able to work at about 70% of the capacity.

When asked about his Udyog Aadhar registration and GST Number, he told that his CA has said to him upto Rs. XX Lakh he need not worry about these formalities. And looking at the slowdown it would take some time for him to reach that turnover.

It is true that it may save some money/time/effort of obtaining those registration, and upto that Rs. XX Lakh magic figure, such registration would be futile. However, we fail to appreciate that such registrations may open up new avenues of business.

You having GST number might make you eligible to be a vendor to a MNC company while your competitors might be at disadvantage. Someone with a ready prospect of work order, might want to pass the order through your only because, you are ready with GST.

Another thought is – are we lifelong going to stay below the threshold – the magic figures of such government procedures ? Or, we would like our business to grow looking at the prospects / opportunities and our abilities.

Similar thought process is about saving tax in business. We appreciate that it is appropriate to optimise the tax as much within the legal boundaries. However, we don’t recommend spending extra hours with your Tax Consultant or CA Firm on tax saving discussion than the time you have even spent with them during the year to discuss how to increase your business.
In fact as a savy businessman, one should talk much with these financial experts on how to leverage the balance sheet, how to increase the turnover and how to set the process / papers / records in order so that the business can be scaled up to next level.

Short term measures like not having a IT enabled record keeping and retrieval system, not having HR process / systems, not having real time MIS (data capturing, analysis and reporting), doing business without bill / GST, etc might save you money today.

But you are loosing the future potential of scaling up. These things which you are avoiding / postponing today are taking you away from your goal.

The answers to these question would talk much about our mindsets. Do we want progressive thought process and grow our business leaps and bounds ? or we would go retrograde and restrict our own potential ?

If we take such registration we would strive more to cross the threshold. We would automatically unleash our potential and over achieve our own targets.

In the end we are slaves of our thought process.