Introduction

Whether you need GST registration dramatically changes how you do accounting. Many small businesses start without GST, then struggle when they cross the threshold.

This guide explains the key differences and what you need to know.

GST Registration Threshold (2025)

Mandatory GST registration when:

• Turnover exceeds Rs 40 lakh (goods)

• Turnover exceeds Rs 20 lakh (services)

• Turnover exceeds Rs 20 lakh (special category states)

• E-commerce sellers (any turnover)

• Inter-state supply (any turnover)

Source: GST Portal - Registration Guidelines

Non-GST Accounting

What It Means

Simple accounting without GST:

• Track income and expenses

• Basic profit/loss calculation

• Simple invoicing

• No tax collection from customers

• No input tax credit

• Simpler compliance

Invoicing

Non-GST invoices contain:

• Your business name and address

• Customer details

• Invoice number and date

• Item/service description

• Quantity and rate

• Total amount

• No GST breakdown needed

• No GSTIN required

Example:

Total: Rs 10,000

(No tax component)

Record Keeping

What to track:

• Sales register (all income)

• Purchase register (all expenses)

• Cash book

• Bank statements

• Basic ledgers

Simpler requirements:

• No tax rate categorization needed

• No HSN/SAC codes required

• No monthly/quarterly returns

• Annual ITR filing only

Compliance

Annual obligations:

• Income Tax Return (ITR-3 or ITR-4)

• Maintain books of accounts (if turnover > Rs 25 lakh)

• Tax audit (if turnover > Rs 1 crore)

No GST-specific compliance

GST Accounting

What Changes

GST registration adds complexity:

• Collect tax from customers (output tax)

• Pay tax to suppliers (input tax)

• Claim input tax credit (ITC)

• Multiple tax rates (5%, 12%, 18%, 28%)

• Interstate vs intrastate classification

• Monthly/quarterly return filing

• Detailed record keeping

Invoicing

GST invoices must contain:

• GSTIN (yours and customer's if B2B)

• Invoice number (sequential, no gaps)

• HSN/SAC codes

• Item-wise tax rate

• Taxable value

• CGST, SGST/IGST breakdown

• Total amount

• Place of supply

• QR code (B2C sales > Rs 500)

Example:

Taxable Value: Rs 10,000

CGST @ 9%: Rs 900

SGST @ 9%: Rs 900

Total: Rs 11,800

Reference: GST Invoice Rules - CBIC

Input Tax Credit (ITC)

Key concept:

• Pay Rs 11,800 to supplier (includes Rs 1,800 GST)

• Charge Rs 17,700 to customer (includes Rs 2,700 GST)

• Net GST to pay: Rs 2,700 - Rs 1,800 = Rs 900

ITC conditions:

• Valid tax invoice required

• Payment made to supplier within 180 days

• Supplier has filed their return

• Used for business purposes

• Return filed within due date

What you CAN'T claim ITC on:

• Personal expenses

• Food and beverages

• Outdoor catering

• Health services

• Life insurance

• Motor vehicles (with exceptions)

• Construction of immovable property

Source: Input Tax Credit Rules - GST Portal

Tax Rate Classification

Different GST rates:

• 0% (Exempt): Education, healthcare, agricultural products

• 5%: Essential items, economy class air travel, small restaurants

• 12%: Processed food, mobile phones (parts), computers

• 18%: Most services, IT services, soap, toothpaste

• 28%: Luxury items, tobacco, automobiles

Critical: Wrong tax rate = penalties + interest

Check rates: GST Rate Finder

HSN/SAC Codes

Mandatory classification:

• HSN: Harmonized System of Nomenclature (goods)

• SAC: Services Accounting Code (services)

Digit requirements (2025):

• Turnover up to Rs 5 crore: 4-digit code

• Turnover above Rs 5 crore: 6-digit code

Example:

• Laptop: HSN 8471

• Software development: SAC 998314

Search codes: HSN/SAC Code Search

Record Keeping

Detailed registers required:

• Sales register (with tax rates)

• Purchase register (with ITC eligibility)

• Credit/debit notes

• Output tax liability

• Input tax credit ledger

• Tax payment records

• Return filing acknowledgments

• E-way bills register

• E-invoice logs

Software essential for maintaining these records properly.

Compliance Calendar

Monthly (turnover > Rs 5 crore):

• 11th: GSTR-1 (sales)

• 13th: GSTR-1 (quarterly filers)

• 20th: GSTR-3B (summary return)

• 25th: PMT-06 (ISD invoice)

Quarterly (turnover < Rs 5 crore):

• 13th of next month: GSTR-1

• 22nd/24th of next month: GSTR-3B

Annual:

• December 31st: GSTR-9 (annual return)

• December 31st: GSTR-9C (reconciliation if audit required)

Late filing penalties:

• GSTR-1: Rs 200/day (Rs 100 CGST + Rs 100 SGST), max Rs 10,000

• GSTR-3B: Rs 200/day, max Rs 10,000

• Plus interest @ 18% p.a. on late payment

Source: GST Return Filing Guide

Key Differences Summary Table

When to Register for GST

Mandatory Scenarios

Must register immediately:

1. Turnover crosses Rs 20-40 lakh threshold

2. Making inter-state supplies

3. E-commerce seller (Amazon, Flipkart, etc.)

4. Reverse charge mechanism applicable

5. Casual taxable person

6. Non-resident taxable person

7. Input service distributor

Voluntary Registration

Consider registering even below threshold if:

• B2B clients need GST invoices

• Want to claim input tax credit

• Expanding into other states

• Building credibility

• Planning rapid growth

Benefits:

• Professional image

• Can claim ITC on purchases

• Eligible for government tenders

• Can supply to GST-registered buyers

Drawbacks:

• Compliance burden

• Monthly/quarterly returns

• Software and CA costs

• Penalties if non-compliant

Transition Planning: Non-GST to GST

Before Crossing Threshold

Prepare 3-6 months in advance:

Step 1: Set up systems (Month 1-2)

• Get accounting software with GST features

• Learn HSN/SAC codes for your products

• Understand applicable tax rates

• Set up invoice templates

• Organize past records

Step 2: Register (Month 3)

• Apply for GST registration online

• Upload required documents

• Get GSTIN (takes 7-15 days)

• Update invoices and letterheads

Step 3: Train team (Month 3-4)

• Billing staff on GST invoices

• Accounts team on ITC and returns

• Sales team on GST communication

• Everyone on compliance importance

Step 4: Notify stakeholders (Month 4)

• Inform customers of GSTIN

• Update suppliers in their records

• Revise price lists (tax exclusive vs inclusive)

• Update website and marketing materials

Step 5: Start operations (Month 5+)

• Issue GST-compliant invoices

• Track ITC eligibility

• Reconcile purchases monthly

• File first return on time

Common Transition Mistakes

Avoid these:

1. Late registration (penalties apply)

2. Not claiming ITC on opening stock

3. Wrong tax rate classification

4. Missing invoice details

5. Not filing first return on time

6. Improper transition invoice from old stock

7. Not informing customers

Software Requirements

Non-GST Accounting

Can manage with:

• Excel spreadsheets

• Basic billing software

• Simple ledger books

• Vyapar/MyBillBook basic plans

Cost: Rs 0-5,000/year

GST Accounting

Need proper software with:

• GST-compliant invoicing

• HSN/SAC code database

• Automatic tax calculations

• ITC tracking

• GSTR-1, 3B generation

• E-invoice integration (if applicable)

• Portal filing integration

• Reconciliation tools

Options:

• Tally: Rs 18,000/year

• Busy: Rs 15,000-20,000

• hisabkitab: Rs 2,999/year (most affordable with full GST features)

• Zoho Books: Rs 8,000-20,000/year

Critical: Software must be updated regularly for GST law changes.

Cost Comparison

Non-GST Business Costs

Annual accounting costs:

• Software: Rs 0-5,000

• CA for ITR: Rs 3,000-5,000

• Bookkeeping (if outsourced): Rs 12,000-24,000

• Total: Rs 15,000-34,000/year

GST Business Costs

Annual accounting costs:

• Software: Rs 15,000-30,000 (traditional) or Rs 3,000-10,000 (hisabkitab)

• CA for GST returns: Rs 3,000-5,000/month

• ITR filing: Rs 5,000-10,000

• Audit (if required): Rs 15,000-30,000

• Total: Rs 60,000-1,00,000/year

Additional time cost:

• Learning GST: 20-40 hours initially

• Monthly compliance: 3-5 hours/month

• Reconciliation: 2-4 hours/month

Common Questions

Q: What if I cross Rs 40 lakh but don't register?

Consequences:

• Penalty: Rs 10,000 or tax amount, whichever is higher

• Interest @ 18% p.a. on unpaid tax

• Can't claim input tax credit

• Legal proceedings possible

• Business closure risk

Timeline: Register within 30 days of crossing threshold

Q: Can I cancel GST registration later?

Yes, if:

• Business closed

• Turnover falls below threshold

• Merged with another entity

• No longer liable to register

Process: Apply for cancellation on GST portal, settle all liabilities first

Q: Is GST accounting difficult?

Reality:

• Initially: Yes, learning curve exists

• With software: Manageable, automation helps significantly

• With CA support: Smooth, professional guidance available

• After 3-6 months: Becomes routine

Key: Right software + basic training = manageable

Q: Should I register voluntarily before threshold?

Register early if:

• B2B customers need GST invoices

• Want to claim ITC on purchases

• Planning expansion

• Building professional image

Don't register if:

• Mostly B2C sales

• Turnover won't cross threshold soon

• Want to keep compliance simple

• Cost-conscious

Q: Can I use the same software for both?

Yes, good software scales:

• Start with basic features (non-GST mode)

• Enable GST features when registered

• No data loss or re-entry needed

hisabkitab example:

• Works for non-GST businesses

• Enable GST with one click when registered

• Historical data preserved

Recommendations by Business Type

Retail Shop (B2C)

Stay non-GST if possible:

• Customers don't need GST invoices

• No ITC benefit

• Compliance burden high

• Register only when mandatory

B2B Services

Register voluntarily even before threshold:

• Clients need GST invoices

• Professional image important

• Can claim ITC

• Easier business growth

E-commerce Seller

Mandatory registration:

• Amazon/Flipkart require GSTIN

• Register before listing products

• TCS deducted by platforms

• Proper compliance critical

Manufacturing

Register voluntarily:

• Significant ITC available on raw materials

• B2B sales likely

• Input credit makes business viable

• Professional image needed

Freelancer/Consultant

Decision based on clients:

• Corporate clients need GST invoices → Register

• Individual clients, small projects → Can wait

• Threshold approaching → Register early

Action Steps

If Currently Non-GST:

Monitor turnover monthly:

1. Track cumulative sales

2. Project when you'll hit Rs 20-40 lakh

3. Start preparation 3-6 months before

4. Don't wait till last moment

Get ready:

• Research accounting software options

• Understand your HSN/SAC codes

• Learn applicable tax rates

• Find a good CA advisor

If Recently Crossed Threshold:

Act immediately:

1. Apply for GST registration today

2. Get accounting software

3. Hire CA for guidance

4. Train your team

5. Update all invoices and communications

Don't delay: Every day of delay = potential penalties

If Already GST Registered:

Optimize compliance:

1. Review if using right software

2. Ensure claiming all eligible ITC

3. File returns on time always

4. Reconcile purchases monthly

5. Stay updated on GST changes

Useful Resources

Official GST Portal:

• Main portal: gst.gov.in

• Taxpayer search: gst.gov.in/searchtp

• HSN/SAC search: HSN Lookup

• Returns filing: GST Portal Login

CBIC (Central Board of Indirect Taxes & Customs):

• Official website: cbic.gov.in

• Circulars and notifications

• Rate schedules

• FAQs and guides

GST Council:

• GST Council decisions: gstcouncil.gov.in

• Meeting updates

• Policy changes

Educational:

• GST tutorials: GST Video Tutorials

• E-learning: GSTN Portal

Software:

• hisabkitab: hisabkitab.co - Affordable GST accounting

Conclusion

The key differences:

Non-GST = Simple but limited

• Easy accounting and compliance

• No tax collection burden

• Can't claim input credits

• Limited to smaller turnover

GST = Complex but professional

• Detailed accounting required

• Regular compliance obligations

• Can claim input tax credits

• No turnover limits

• More credible business image

Most businesses eventually need GST. Better to prepare early than scramble when you cross the threshold.

Smart approach:

1. Start with simple non-GST accounting

2. Use software that can handle GST later (like hisabkitab)

3. Monitor turnover closely

4. Register 3-6 months before hitting threshold

5. Get proper training and CA support

Don't fear GST. With right software and basic understanding, it's manageable. Thousands of small businesses handle it successfully.

The transition from non-GST to GST is a milestone — it means your business is growing. Embrace it with proper preparation.

Get Started with Proper Accounting

Whether non-GST or GST, hisabkitab helps:

Non-GST businesses:

• Simple invoicing

• Basic accounting

• ITR preparation support

• Rs 2,999/year

GST businesses:

• Complete GST compliance

• Automatic return generation

• ITC tracking

• GSTR-1, 3B filing

• Same affordable price: Rs 2,999/year

Free trial: 7 days, no credit card Visit: hisabkitab.co Email: contact@hisabkitab.co

Start with simple accounting. Scale to full GST when needed. All on one platform.