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How Does GST Work for Businesses?

The Goods and Services Tax (GST) has impacted small and medium businesses in India- it has bought with itself several benefits as well as challenges. It is levied on each stage of production, manufacturing, distribution and sale of goods and services. The supplier, manufacturer and service provider must be registered with CBIC. The GST can be calculated with the GST Calculator which is available on online.

The four different slabs are:

  • 5% - items of mass consumption

  • 12% - processed and packaged food

  • 18% - comfort products

  • 28% - luxury goods

GST influences the cash flow of business and business loans may be required to keep things running smoothly in several situations. This is where you can consider business loans from Bajaj Finserv. Loans up to Rs. 30 lakh are offered at competitive rates of interest and you only have to submit two documents.


Input & Output Tax concepts


Input tax is the tax added to the bills paid by the businesses to the creditors and suppliers. Output tax is the tax received from the customers. The input tax credit can be claimed on the invoice. However, it can be claimed on supplies which are used during manufacturing. The net GST is the amount that is paid finally. The GST calculator helps in working out this amount.


Accounting for GST


Companies with a turnover of less than Rs. 1.5 crore have to pay GST on a quarterly basis while those with turnovers over Rs. 1.5 crore have to pay on a monthly basis. While calculating the tax, credit can be availed if the output taxes are greater than the input. However, if greater input tax has been paid, the tax refund can be applied on goods and services like products stocked for resale, raw materials, equipment for the office and so on. However, refunds cannot be claimed on services or goods bought for personal use, wages of employees and private expenses.


The benefit of output tax


When the output tax is received, there is a time gap of about 3 months before deposit. This amount can be used for meeting immediate cash needs. However, this should ideally not be used in such a manner. Instead, look for business loans as mentioned above, to meet working capital requirements.

Also Read: Learn About How GST Works for Businesses!

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