Know about the Finance and Investments Terms

On July 1st, 2017; the much anticipated GST (Goods & Service Tax) was finally rolled on and brought into effect by the current finance minister of India - Mr. Arun Jaitley. Talking of GST, it is a comprehensive, destination-based indirect tax levied supply of goods -  import and export. 

Why was GST launched? 

The present taxation system was very complex to understand and inconvenient. Also, the business owners, owing to the multiple taxes levied at different points, weren’t able to garner decent ROI. The manufacturing cost was increasing and the sales were dropping significantly. Thus, the current Finance Minister came up with GST with an aim to simplify the tax structure and combine the different direct and indirect taxes into one. 

Impact of GST on business

Talking about the impact of GST on businesses, it would be wrong to say the new tax policy hasn’t helped them. Let’s take a look at the various ways in which GST has helped businesses? 

• The manufacturing cost has gone down due to the reduced number of taxes and even the taxation process has become simpler. 

• Input tax credit has been expanded to include any input or services that are used or intended to use for the furtherance of business.  

• In addition, some businesses which weren't covered under the input tax policy will be able to receive the benefits. 

• These changes will not only lead to reduced operational costs, but even the higher net margins will also go up significantly along with improved working capital for businesses.

On a concluding note, GST calculation is slightly complex. Hence, you can use GST calculator to make the task easier.

Also Read: Impact of GST on industries: Better cash flow and working capital