5 Simple GST Related Practices That Will Help Your Business In 2020
GST is a single tax which applies to all goods and services. GST has been implemented in the country quite recently. Therefore, the benefits which come from it are new to everybody, which makes it difficult to understand.
GST brings the following terms into the picture:
IGST stands for Integrated Goods and Service Tax, cgst full form is Central Goods, and Service Tax and SGST stands for State Goods and Services Tax. These are the major components of GST; this tax brings out the destination based nature of the Goods and Services Tax. These taxes are applicable based on the location of the seller and the buyer.
GST practices that can help your business
1.File a singular tax for the entire business
Single taxes remove the ambiguity which comes from multiple taxes. Various taxes such as excise duty, VAT, Sales Tax etc. were charged on various goods and services. All of these taxes had to be addressed separately.
With GST, the taxation system has become streamlined. Businesses should reap out its benefits. Also, the GST declaration filing has become simple for companies.
- Use the Input Tax Credit facility efficiently
GST allows you to avail input tax credit. Input tax credits allow you to reduce your tax liability while paying a tax on output. The tax already paid on the inputs such as the raw materials etc. can be deducted from the tax on outputs.
Input tax credit comes as a tax-saving tool. It eliminates the cascading of taxes. Also, the double payment of taxes which makes things expensive for the businesses is taken care of.
The businesses should file their returns and avail input tax credit on it. Also, for availing input tax credit following conditions must be fulfilled:
- Possession of all the tax invoices
- The goods or services have been received
- Returns have been filed on time
- The supplier has paid the tax charged to the Government
- If the products are supplied in lots, ITC can be availed only after the last lot is received
- Depreciation must not have been claimed on the tax component of the capital goods.
- Make use of the Composition Scheme feature that comes with the new taxation system
Composition scheme comes in handy for the businesses having a turnover of fewer than Rs.1.5 Crores (Rs.75 Lakhs in case of northeast states). By availing this scheme, small businesses can avoid the formalities that come with GST. This scheme reduces your tax component to a great extent.
The following businesses cannot opt for composition scheme:
- E-Commerce Operators
- Inter-State Suppliers
- Ice-Cream, Tobacco and Pan-Masala manufacturers
- A non-resident taxable person or a casual taxable person
The GST rates under composition scheme are mentioned below:
|Business||CGST||SGST||Total GST Applicable|
|Traders and manufacturers of goods||0.5%||0.5%||1%|
|Restaurants (Not serving any alcohol)||2.5%||2.5%||5%|
- Use the new tax registration laws to your advantage and save taxes
A VAT registration was compulsory for all businesses having a turnover of more than Rs.5 lakhs. In the case of GST, the registration becomes compulsory only when your turnover is more than Rs.20 Lakhs (10 Lakhs in case of north-eastern states). Small businesses can benefit a lot from this provision.
- Make use of GST to increase efficiency of logistics and to improve the ease of doing business
Earlier, businesses had to comply with various laws under VAT and Service Tax. Also, these taxes were charged on every step. This led to a cascading effect of the taxes.
Businesses had to calculate various taxes and different points. This made supply difficult. Implementation of GST has made the life of businesses simple.
SGST is collected by the state governments when a supply of goods takes place within the state. CGST and IGST are applicable if the inter-state supply of goods is made. This makes the movement of goods easier and invoicing simple.
Businesses can reap a lot of benefits from the implementation of the Goods and Services Tax. The gst rates item wise list can be checked for a comprehensive understanding of the rate slabs and how the tax is being charged.
With features like availing the input tax credit and registering under the composition scheme, the business has benefitted a lot with GST. GST has brought all taxes together and unified it to one single tax. This has made taxation simple to understand.
I am Daisy Bell and a pro-level blogger with years of experience in writing for multiple industries. I have extensive knowledge of Food, Fitness, Healthcare, business, fashion, and many other popular niches. I have post graduated in arts and have a keen interest in traveling.