GST Guide: How GST Works for Your Businesses - Loan Trivia


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Thursday 9 August 2018

GST Guide: How GST Works for Your Businesses

In an effort to simplify the existing tax norms, the current BJP government introduced Goods and Service Tax - GST, to replace the existing tax system. The aim was to club the different taxes charged at different levels of sale. The move turned fruitful for some, but others are still criticizing GST by calling it unplanned and inefficient. Now, whether you belong to the first section of people - people who benefited from GST, or to the second category - the people who are facing loss due to GST - one thing is pretty evident, tax calculations are going to be difficult.

Having said that, don’t get scared! Not so soon. You can use the GST calculator in India to calculate the applicable taxes and save your time. The calculator is available on the internet and it is very easy to use given you use the right GST rates while doing calculations.

How GST works for business? 

Let’s understand the same as an example, a manufacturer of shirts buy raw materials to weave a cloth- thread, button, tailoring equipment that cost Rs 100. As per the previous tax norms, he paid Rs 40 as tax apart from sales tax. The gross value of the product in this case would be Rs 140, the tax on the finished product will be Rs 13. Now, as per GST, the merchant can set off this tax Rs 13 against the tax which he has already paid. Accordingly, the effective GST incidence on the manufacturer will only be Rs.3.

Taking a cue from the above example, it can be said that GST has simplified the indirect taxation system in India and made it a lot better.

Also Read: How GST Works for Businesses

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