GST Business Loan

GST Business Loan


Vakilsearch Staff

Vakilsearch Staff

160 week ago — 7 min read

The introduction of the Goods and Services tax was one of the most significant changes that India’s taxation system had undergone in recent years. The government has recently made it possible for companies to leverage their GST returns to take out high-value GST business loans. These GST loans help in quick business financing, leading to better cash flow and corporate financial flexibility. The best business loans also help in financing working capital needs, serving as both a short and long-term solution. So, what are the best business loans banks offer in India? This article will look at how GST business loans work, why they are important, and how businesses can obtain them.

What is a GST business loan?

A GST business loan works as a collateral-free loan that does not require the borrower to mortgage any property as collateral. Financial institutions assess the borrowing capacity of applicants by analysing their GST returns. Based on their previous tax returns, the financial institutions approve a suitable GST loan, leading to faster loan approval and credit availability. GST business loan approval does not require additional financial documents, making it quick and easy to get such GST loans. Various banks and other financial institutions have kept limits on the maximum amount they will offer via such GST loans. 

Who can avail a GST Business Loan?

Several private and public sector banks now offer such GST business loans to applicants. Hence, choosing the best business loan can be a tricky affair. Additionally, different banks have different thresholds for the maximum credit they will extend businesses via a GST business loan. The government has capped the business loan at INR 1 crore. Business sectors, from manufacturing to distribution, will benefit from the introduction of this new system. The following business entities can avail a GST business loan in India under the new scheme;

  • Public limited companies
  • Private limited companies
  • Partnership firms
  • Sole proprietorships

Additionally, manufacturers, retailers, service providers, wholesalers, and traders who export or import products to and from India may apply for a GST business loan. In most cases, small and medium enterprises will receive such loans as they are the ones that find it most difficult to get funding. Hence, the following business entities that fall into the MSME category can avail of the best business loans from banks by simply furnishing their GST returns.


What is the 59-minute Government Portal?

The government has started a new 59-minute website that MSMEs can use to avail of a GST business loan ranging from INR 10 lakhs to INR 1 crore. As the name suggests, the whole process will be complete within an hour, giving businesses access to quick and effortless funding. The GST loan approval process has been updated to become contactless and fully automated. The interest rate for such loans start from 8%, and they require the applicant to provide no collateral whatsoever. The handing out of such GST loans is connected to the Credit Guarantee Fund Trust for Micro and Small Enterprises Scheme, better known as the CGTMSE Scheme. Once approval has been granted, funds will be disbursed in about a week.

This web portal makes use of advanced algorithms to prevent frauds and other issues and to verify all the details submitted by the applicants. The portal also connects with various banks, helping prevent physical meetings and visits. The GST loans will be provided mostly by the Small Industries Development Bank of India and other public sector banks, including the following;

  1. State Bank of India
  2. Punjab National Bank
  3. Bank of Baroda
  4. Indian Overseas Bank 
  5. Vijaya Bank

Also read: Need a loan? Government schemes for MSMEs in India


What are the steps involved in availing a GST business loan?

  1. First and foremost, MSMEs will have to register on the government portal by providing their email ID, mobile number, and full name.
  2. Next, the applicants must log in to the portal and provide their GST details and tax information as required.
  3. Applicants will then have to upload their tax returns and other financial documents in XML format. They also have the option of logging in using their PAN and Incorporation date.
  4. Similarly, applicants must either upload or log in using their banking credential to give the officials access to their bank statements.
  5. Next, they will have to provide details regarding the directors, partners and owners of the company. They must also furnish further details regarding their business, why they need the loan and whether they have taken out any loans in the past.

Lastly, the applicant must choose the appropriate lender, pay the required processing fees and wait to download a copy of the approval letter once the processing is complete. The only eligibility criteria for applying for such loans is that the business must be at least a year old, and must have monthly sales of at least INR 2,00,000.

Documents required for GST business loan

  1. PAN card
  2. Residential address proof: rent agreement/ driving license/ Aadhaar card/ voter’s ID/ ration card/ passport 
  3. Bank account statements of the last six months
  4. GST registration certificate/ company incorporation certificate/ shops and establishment certificate/ business PAN/ trade license
  5. Applicants applying for loans worth over INR 20 Lakhs, must submit the following;
  • Audited financial statements from the last two years
  • Income tax returns from the last two years
  • GST Returns of the past six months


Also read: What are the different types of funding for Indian startups?

To explore business opportunities, link with me by clicking on the 'Connect' button on our eBiz Card.

Image source:


Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy or position of GlobalLinker.


Posted by

Vakilsearch Staff

Greetings! We would love to work with you and your company. We look forward to connecting with business houses and MSME's.