Suresh had entered into the wholesale trade of packaging materials, following in his father’s footsteps. When the Goods and Service Tax (GST) regime was implemented in India in July 2017, Suresh was bewildered at how he was expected to comply with the new taxation regime. Aimed at simplifying the taxation regime in the country, the government and trade bodies had held several seminars and conferences that attempted to demystify the GST. The GST is meant to increase compliance from small businesses, and bring all taxpayers into the tax paying net.
While the GST was meant to simplify operations for traders and small businesses in the country, traders such as Suresh have faced several teething struggles. However, he was quick to realise that if you file GST and maintain compliance, it is much easier to apply for business loans. He had been seeking a business loan which could help him get access to operational capital and increase the profitability of his business. The best small business loans, such as those available on Finserv MARKETS, can help business owner access up to Rs. 30 lakhs with approval for business loans being processed in under 3 minutes. You can also read what are the benefits of taking a business loan for your business.
While the GST promised to be an easier system of taxation than was previously operational in India, it was important for Suresh to learn some terms that cropped up while paying his taxes. Read on below to learn the most important GST-related jargon.
Types of GST:
GST has been segregated into CGST(Central Goods and Services Tax), SGST(State Goods and Services Tax) and IGST(Integrated Goods and Services Tax). While CGST refers to the portion of the taxes that go to the Centre, SGST refers to the share that goes to the state government. Integrated GST or IGST is the tax levied on supply of goods during inter-state trade.
GST is supposed to eliminate double taxation, which refers to the same good or service being taxed twice by different authorities.
The GST Network is an organisation which shares a portal for different shareholders to discuss matters relating to the GST. It is a portal where the government, taxpayers and other shareholders can interact and hold discussions regarding the new taxation regime.
This term makes mention of all the entities that are liable to taxation under the GST. Taxable persons include all businesses that have an annual turnover of over Rs. 20 lakh. The annual turnover eligibility is set lower for businesses operating in the North East and hill states, at Rs. 10 lakh. Since Suresh had already realised that his business’ turnover made it a taxable person, he was keen to learn about the implications this brought.
This refers to multiple goods that are supplied as a composite unit. For goods that form a part of composite supply, tax will only be charged on the main ingredient or product.
A 15-digit GST Identification Number (GSTIN) has been issued to all taxable persons for making transactions more transparent. All company purchases and sales now must compulsorily mention GSTIN details. When you apply for business loan, you will be asked to provide GSTIN details by the lender. If you opt for the best small business loans such as those available on Finserv MARKETS, you can easily avail Rs. 30 lakh in under 3 minutes. With a GSTIN, applying for a business loan will take less time because the lender is assured of your tax compliance immediately, and it is much easier to access your credit score.
A composition dealer refers to a small businessman who can afford to pay taxes at concessional rates, and does not have to collect it from customers.
The reverse charge refers to the onus that lies on customers to pay taxes. This liability to pay GST rests with the customer, and not the supplier of the good or service. Businesses are required to pay GST each time they make a purchase from factories or even dealers and vendors.
Distinct persons refers to the branches of an organisation, that have been registered under separate GSTINs. Since they are distinguished by different GSTINs, their GST payments also remain separate.
Zero rating refers to goods and services that have been placed at the ‘zero’ tax slab in the GST. Purchase of these products includes zero payments in the form of GST. Several essential food items which see regular consumption have been placed under this bracket, including fresh fruits and vegetables, buttermilk, curd, milk, flour, besan, natural honey, bread, all types of salts, eggs, hulled cereal grains and even fresh meat. Non-edible items included in the zero rating slab of GST include sindoor, kajal, drawing and colouring books and even stamps.
Having understood these terms, Suresh set about streamlining his business in line with the GST guidelines. He enrolled his business and received his GSTIN, which he was then able to share with his vendors and customers. His dealers and clients were also grateful for the manner in which business operations became smoother.
The GST system is still in the process of achieving full implementation in the country. Traders and business bodies are yet to significantly begin seeing the impact of GST. The taxation system upheaval is aimed at easing compliance and bringing all businesses within the tax net in the country. It is supposed to make operations simpler for businesses, including in terms of availing business loan. When you apply for business loans you can simply mention your GSTIN to ensure faster processing. You can avail the best small business loans from Finserv MARKETS and easily repay it over a period of 12 to 60 months.
Also read what are the components of GST, difference between SGST, IGST & CGST only at Finserv MARKETS
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