Learn About How GST Works for Businesses!


Goods and Services Tax (GST) is levied on each stage of manufacture, production, distribution and sale of goods and services. Thus, it affects businesses. A manufacturer, supplier or service provider must be registered with the CBIC for the purpose.

Here is an overview on GST!

Launched on 30th June 2017, GST came up with the tagline ‘one country, one tax, one market’. With its implementations, Indians will now pay a consolidated tax instead of the previous system of paying multiple taxes. People need to pay GST at their final point of purchase. Overall, it has brought significant benefits like making Indian products and services more competitive on the global market, representing India as a common national market.

You can calculate the levy of GST with the GST calculator, a tool available on websites of lending institutions. The rates are divided into four slabs.

  1. 5% for items of mass consumption.
  2. 12% for processed and packaged food.
  3. 18% for comfort products like smartphones, refrigerators, etc.
  4. 28% for luxury goods.

Thus, now you can quickly decide which rate goes with your goods or services.

GST influences the cash flow of business and, in most cases, it increases current asset requirement. Thus, companies may need to introduce fresh money. In such a situation, a business loan from reputed financial institutions can come to your aid to meet the working capital needs along with other requirements.

Now, have a look at how GST works!

  • The concept of input and output tax

First, you need to know what an input and output tax is before knowing how GST works.

  1. Input tax: It is the tax added to the bills you pay to your creditors and suppliers.
  2. Output tax: It is the tax you receive from your customers.

You can claim an input tax credit on the invoice. However, you can claim it only on those supplies which come in direct use while manufacturing. The net GST is the amount you pay. A GST calculator comes in handy for calculation of this amount.

Also, with the input tax calculation, you get to know the increase in your company’s current asset requirement. Match it with the available current assets. If there is a deficit, you can meet it with fresh capital infusion using a business loan.

  • Accounting for GST

Payment due dates of GST are quarterly for companies with a turnover below Rs. 1.5 Crore. However, businesses with turnover above Rs. 1.5 Crore need to pay the taxes monthly.

When calculating the tax amount with GST calculator for accounting purpose, you can do it according to your turnover. You can also avail the credit when output tax is more than input tax. However, when you have paid a greater input tax, you can apply for an input tax refund on goods and services like:

  1. Raw materials
  2. Products stocked for resale
  3. Equipment of office and for capital.

But, you can’t claim a refund on these:

  1. Wages of employees
  2. Any services or goods bought for personal use
  3. Any private expenses

So, now you can efficiently use GST calculator for arriving at the credit or refund amount.

  • The benefit of output tax for businesses

When you receive output tax for business, you have a time gap of one-three months before deposit. Thus, you can use the amount for meeting any immediate cash need.

However, you should never calculate it as a component of working capital to make up for the deficit. In case you are short of funds, you can avail a online business loan. With the loan, you can also successfully implement big projects as you avail up to Rs. 30 Lakh as credit. Lenders bring this loan with pre-approved offers too.

The pre-approved offers of Bajaj Finserv are available on financial products like business loans, personal loans, mortgage loans, and various other financial products as well as services. You need to fill in a few details to check your pre-approved offer. It’s a quick and easy process of availing funds.

Thus, you got a clear idea of how GST works for your business. You can now proceed to use the GST calculator for maintaining the accounts. It will help you make timely payments and keep a healthy working capital.

Author Bio:

Nishant is a passionate blogger. He has expertise in writing finance articles. He have been serving society as a financial adviser. He loves keeping himself up-to-date with the news and happenings around. He is always open to learning and shares his experiences on Greetings of the Day.

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Akshay Sharma

Hi! I’m Akshay Sharma. I’m a blogger at Imagination Waffle. I love to read and write about Fitness, Health & Lifestyle topics.
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