Know and Fill Your Cash Gap

Let’s Fill The Cash Gaps

If you have registered yourself on Numberz or are checking out the way it works, you are most likely a person working around money for your enterprise, and hence, you must have witnessed cash gap yourself or have seen someone you know, go through.

 

The world revolves around businesses and businesses have money in their core, and hence ‘steps in’ the most dangerous problem of any business, “the CASH-GAP.” Some refer to it as ‘valley of death,’ for businesses, of course.

 

Having heard the word twice now, what exactly is cash gap?

Well, remember that time when you were waiting for a pending payment from a client, and a new investment requirement slammed itself on you?

That situation of you short on money for putting into the investment requirement is called cash gap.

 

According to the ‘Gompers and Lerner study,’ this challenge is the cause of 90 percent dying ventures within the first three years of their establishment. Well, don’t be one of them!

 

Cash Gap Is An International Problem

Most of the countries in the world are either developing or underdeveloped and hence the growth and failure of businesses is highly dependent on the cash flow management.

 

India And The Culture Of Business

As per stats, businesses and self-employment are the most prominent source of employment growth and contribute a major share to industrial production in India. This leads to even more pressure on the businessmen to maintain themselves and their identity.

 

Your Objectives And Financial Goals

Normally businesses need to invest in two type of goals, the short-term objectives, and the long-term objectives. Both of these behold equal value and hence the need to struggle in both the arenas steps in. This makes the exertion even harder.

 

Plan, Monitor, And Control

When it comes to cash management in enterprises, planning is the key. You need to plan by keeping in mind, all the buffers (and problems) that may arise and then monitor accordingly. While monitoring is important, it is also equally significant to control your expenses to expect most out of your investments.

 

Why Not Banks?

Cash gap and lack of cash management is a huge problem for all the springing enterprises, as huge as it leads to a summation of rupees 2.95 trillion (when cash gap is summed, of course). This gap is ever expanding, the reason being, the businesses especially SMEs are firms with financial requirement quite large for microfinance to be possible, but quite small for being solved by corporate banking models. SMEs are also a little riskier to be invested in when compared with corporations, and hence banking models in India are not very supportive.

 

How To Be Safe And Productive?

Ploy With Strategy!

Your strategies must include the cash management, liquidity management and lowering the cash gap. For all this to be possible, you need to know your clients and hence their way of working. You also need to have ample buffers, so as to avoid the vicious cycle of debt.

 

Give Government Methodologies, A Try!

Looking at the huge part of the economy that businesses and organizations like them are supporting, the government is also stepping in to help the growth rate rise. MUDRA is a scheme launched by the government, for funding the SMEs. It is an initiative having the sole intention of upliftment of SMEs and start-ups and hence the economy in general. The government has also launched ‘Make in India’ and ‘Start-up India’ schemes, which might benefit you. Remember that for this source to help you, you’ll need quite a lot of efforts, so prepare yourself before jumping into the realm of government funds!

There is one more way to escape the ‘valley of death’ and reach the heights of your dreams!

 

We at Numberz, have come up with a way of filling up the cash gap that stays only between you and us! We provide ‘credit line’ to our customers.

 

Well, you ask, what is ‘credit line’?

It is a pre-approved loan for those businessmen who are in dire need of finances. We provide working capital loans on the basis of your turnover and CIBIL score (or credit score). When you need to apply for a loan or need to cope up with a cash crunch, the maintained credit score (a.k.a CIBIL score) always helps.

 

How is it useful, or better than other methods?

It is not like this is the best among every possible option but the most feasible and easily accessible one. We understand that your energies must be invested in coming up with dazzling ideas to make your business best and that you must not be itching your head searching for options to get financial support. Hence, the credit line is just a few clicks away from you.

 

How can you get the credit line?

This is a 4 step process (we are not lying):

Step 1: Share your contact details with us.

Just the basic one, you know, we’ll need to be in touch, to make the process as smooth as possible.

 

Step 2: Share the most basic data

We’ll need the company details and a few documents for enrolling you up for the credit line. Trust us, they are the most basic ones.

 

Step 3: Determine your credit line

You get to determine your credit line limit, and we’ll guide you according to your turnover and your documents.

 

Step 4: We’ll get back to you

Relax. Work. Invest time in meaningful things. We’ve got this covered.

 

You feel it’s too simple to be possible?

Well, that’s what we’re here for.

 

With all that being said and your cash gap bridges in place, we always want your best. We’ll be on your side, whenever you need us and your brainchild will prosper like never before. Because, now, you can give it your full attention.

Got any question? We’re here to help. Feel free to reach us!

GST

GST and its implications for small business.

GST stands for good and service tax. GST implementation is said to be landmark reform in terms of taxation in India. While small business owners think as after Goods and Service Tax (GST) they need to deal with one tax inspector instead of many as in today’s scenario. GST will raise the bar for minimum turnover from 5L to 10L also it will lower the taxes whose turnover will lie in the range of 10-50L. Hence it will come as a big relief to small business owners. After demonetization and implementation of GST, Small businesses are forced to move on digital currency and stay away from heavy cash dealings. Also, it will allow them for better reporting and transparency. It will improve their chances to get access to credit from primary financial institutions instead of raising fund from the secondary market. After demonetization lending rate offers are bound to go down by financial institutions. Registering and expansion policies will be easier in Goods & Service Tax (GST) regime as India will become one market. Hence now selling goods across states becomes easier as intrastate transactions because cross-border taxes are being eliminated.

Also once small business gets Goods & Service Tax (GST) registration, it needs to generate GST based TAX invoice for compliance. This comes as a big challenge for small business owners as they don’t have enough budget to support the infrastructure required for meeting all the compliances in this digital era. But once all the invoices and cash flow actually move on to cloud solution and then it gets automatically reconcile with the master database of Indian government for Goods & Service Tax (GST) filing. Cloud-based solutions will play an important role in letting these small businesses file their GST with ease, both in terms of efficiency and monetary benefit. Security of these cloud-based solutions is the key issue for any small business out there as they have very specific customer segment and they play in the niche market with their product or services. Hence for any SMB to adopt one of many cloud-based solutions is going to be a key decision for data security. SMB needs a single platform where it can manage its own cash flow, raise invoices, manage expenses, file GST and get easy credit facility. Considering all these factors in mind we have created an awesome cloud based solution numberz, which actually helps in all these services with high security of data encryption. All data is stored on cloud only and is easily accessible from any device anywhere. It makes your business on the go and one can avail any of these facilities from one’s mobile handset or tablet. The idea is to reduce friction among all the agents involved and keep complete transparency among all parties involved.

Invoicing under GST

Invoicing Under GST: Everything you Need to Know

Almost every kind of indirect tax in India requires the preparation of an invoice. This is because not only it serves as a proof of a sale but also provides information on every other form of supply such as exchange, transfer, barter, etc.

With the implementation of GST however, the way invoices are created will be changed. According to the GST regime, two types of invoices have to be issued either before or on the occurrence of a particular event within a certain period. These invoices are the tax invoice, and bill of supply.

Tax Invoice

If you are a registered taxable person under the GST regime who is supplying goods or services, then you are required to issue a tax invoice for all the supplies involved.

Bill of Supply

If you are supplying goods or services that are exempted from GST, or if have opted for the composition levy scheme (provided under the GST regime itself) then you will need to issue a bill or supply rather than the tax invoice for the supplies. Plus, you can’t use the bill of supply to claim input tax credits.

What are the Differences Between a Tax Invoice and a Bill of Supply?

  • A tax invoice is to be issued to a taxable supplier liable under GST regime, who is supplying good and/or services that are taxable. A bill of supply, on the other hand, is to be issued by the supplier of goods and/or service that are exempt from GST, or in case the supplier is a composition taxpayer.
  • You can claim Input Tax Credits with a tax invoice, but not with a bill of supply.
  • Reverse charge (in which a tax paid is by the recipient of goods/services instead of the supplier) in allowed for the registered GST sellers. However, taxpayers under the composition scheme have to pay the taxes themselves.

How to Issue a Tax Invoice?

If you are a registered taxable person under the GST scheme, then you need to issue a tax invoice either before or at the time of when you have to:

  • Remove goods, in case the supply includes movement of goods.
  • Issue several statement accounts in succession.
  • Deliver goods to the receiver, in case the supply doesn’t include the movement of goods.

You have to issue a tax invoice in accordance with the following timelines:

  • Within 30 days under normal circumstances.
  • Within 30 days from the date of due payment, if there is a continuous supply of services and the due date is ascertainable.
  • Within 30 days from the date of payment, if there is a continuous supply of services and the due date is unascertainable.
  • At the time of cessation, if there is a continuous supply of services and the contract expires/made to nullify.
  • Within 45 days from the supply of service, if you are a bank on NBFC.

The following are the details to be included in your tax invoice:

  • Your name, address, and the GSTIN number or registration number.
  • A consecutive serial number that doesn’t contain any special symbols (alphabets and numbers only) and is different for every financial year. For instance, for the financial year 2017-2018, you can use 2017NameOfCompany.
  • Issuing date.
  • Description of the goods and services involved.
  • The total value of the goods and services.
  • Rate of tax levied (CGST, SGST, or IGST)
  • Place of supply along with State name, if it’s an interstate

If you are an exporter then you need to include some additional information in the invoice, which is:

  • Name of the country along with the address you are exporting the goods to
  • The statement “Supply meant for export on payment of IGST” or “Supply meant for export under bond without payment of IGST”, depending on the case
  • Your name and address
  • Number and date of ARE-1, which is the application for removal of goods for export

If you are a goods transport agency then the invoice issued by you should have the following information:

  • Gross weight of the shipment
  • Name of the consignee and consignor
  • Registration number of the carriage used for transportation
  • GSTIN of the taxpayer
  • Details of the shipment, such as the address of origin and destination

How many copies of tax invoices have to be issued?

If you are supplying goods then you are required to create three copies of the invoice:

  • Original Invoice: This is the original invoice marked as “ORIGINAL FOR RECIPIENT” which you have to issue to the buyer of the goods.
  • Duplicate Copy: This is the second copy of the original invoice marked as “DUPLICATE FOR TRANSPORTER” which you have to issue to the delivery boy (the one transporting the goods). However, if you have an invoice reference number then the delivery boy needn’t carry the duplicate invoice.
  • Triplicate Copy: This is the final copy of the tax invoice (marked “TRIPLICATE FOR SUPPLIER”) that you have to keep with yourself for record purposes.

In case you are supplying services then you need to create just two copies of the invoices:

  • Original Copy: This one is marked “ORIGINAL FOR RECIPIENT”.
  • Triplicate Copy: This one is marked “TRIPLICATE FOR SUPPLIER”.

How to Issue a Bill of Supply?

If you have opted for the GST composition scheme then instead of tax invoice you have to issue a bill of supply, as you are not allowed to collect the tax.

The bill of supply should include the following:

  • Your name, address, and GSTIN
  • Date of issue.
  • A consecutive serial number that doesn’t contain any special symbols (alphabets and numbers only) and is different for every financial year. For instance, for the financial year 2017-2018, you can use 2017NameOfCompany.
  • Description of the goods and services involved.
  • The total value of the goods and services.
  • HSN code (in case of goods) or Accounting code (in case of services)
  • Your Signature (either digital or non-digital).

Also, if the total value of the goods supplied is less than Rs. 100 then you are not required to issue a bill of supply unless the receiver insists.

Small Business Finance

5 Small Business Finance Basics You Must Understand

Finance is at the core of every business- there is no denying that. However, while large businesses can afford to have the best finance gurus to keep tabs on the money, small businesses often have to learn a lot of these things through trial and error. There are many moving parts in the finance management system which is why it can be overwhelming to keep everything under control.

Here are five small business finance basics that you should understand to run your company efficiently:

1. Profit Margin

The first thing to understand about margins is that they are of two types- gross and net. The former is used to measure the profitability of a single commodity. So, if it costs you Rs. 2000 to make a product and you are selling it at Rs. 2500 then your gross margin is Rs. 500. Most small businesses use gross margin as a metric for their profits. However, looking at the big picture it isn’t of much use, and here net profit margin comes into effect.

Net profit margin is calculated by deducting all of your business expenses from the total sales and dividing that figure by the total revenue. So, if you generated Rs. 3 lakh in revenue last year, and your total expenses were Rs. 1 lakh then your profit margin can be calculated as:

Profit margin= (300,000-100,000)/300,000 =  .66, or 66%

It is important to note that profit margins are industry-specific. Thus, you will find that business owners in some industries make more money than those belonging to other industries. For instance, many big food companies have net margins of just 4% or 5%. However, consultancy companies can have way higher margins, because the overhead there is little.

When you start your business, your margins are usually high, but as it scales you have to buy more equipment and hire more staff, which eventually lowers the gross margins. However, the net margin is what matters at this point, and it can increase if you make the right business decisions.

2. The Balance Sheet

Balance sheets serve as a financial dashboard for your company which you can refer to at any point to time to get a quick understanding of where you stand financially.

There are three main components of a balance sheet, which are:

Assets

There are mainly two kinds of assets: current assets and non-current assets. The former are most likely to be converted into unrestricted cash within one business cycle (12 months in most cases), but the latter will not. Inventories, accounts receivables, etc. are considered as current assets.

If you have a large number of assets or cash on your balance sheets then you can attract investors easily. This is because these can be used for protection in rough times or for scaling the business in future.

Liabilities

Just like assets, liabilities are of two types: current liabilities and non-current liabilities. Current liabilities are obligations that must be paid within one business cycle, such as payments pending for suppliers, etc. Non-current liabilities are long-term obligations such as loan debt, etc.

Equity

Equity is the ownership interest of shareholders in your company. It can be calculated by deducting total liabilities from total assets. Thus:

Equity = Total Assets – Total Liabilities

Businesses often have to sell equity shares to raise capital for purchasing equipment, making investments, etc. However, each time you sell you lose a portion of your company. Thus, you would want to hold onto to your business as much as possible. Selling an investor 51% or more of your business in equity means giving away the decision power. This can change everything, and thus be chosen only as the last resort.

3. Cash flow

Cash flow is the total amount of money that comes in and goes out of your business. It is one of the most important numbers that you and your stakeholders should know about. Unfortunately, it is often overlooked in lieu of other numbers on the balance sheet and income statement, etc.

New businesses often use the phrase “to be cash flow positive”. It means that you are bringing in more money than you are spending. Similarly, to be cash flow negative means more money is being spent than generated. Or in other words- the business is actually losing money.

It is important to make cash flow projections a part of your budgeting process to stay on top of the financial activities. Not having a sound understanding of how cash flow works can lead to disastrous results. For instance, you can end up waiting for payments from clients while there are several bills to be paid already. There should be sufficient cash flow so that you can cover all the expenses while staying cash flow positive.

4. Business Financing

Funding is one of the major challenges that small businesses have to face. Whether you need initial funding to start a business from scratch, or to meet short-term obligations it is important to get the money from the right source. Making a wrong decision here can have serious repercussions that includes losing a large portion of your company. The following are two of the most common business financing options that you can consider:

Debt Financing: Debt financing is the simplest way to fund a business. It works the same way as any standard personal loan or home loan works. To get a business loan you can simply contact a bank or a P2P lender (which is becoming more popular lately) and submit an application for the same.

Equity Financing: Businesses only go for equity financing when they are unable to get a business loan. This is because while you don’t get debt on your hands in this method you lose something even bigger- a part of your company. You basically sell off your company share to a venture capitalist. So, you don’t have to pay back the money, but the seller becomes a part-owner.  Equity financing is also more complicated than debt financing. You have to consult with the existing investors before making decisions and work on the legal aspects of the transaction before finally receiving the money.

5. Payroll Calculations

Payroll processing is comprised of calculation of payments that you make to your employees. Since there are several factors involved the process can be quite complicated.

According to the minimum wages act of India, you have to include some mandatory components in their payrolls, such as Basic (basic salary), DA(Dearness Allowance), and HRA(House Rent Allowance). You also have to make certain deductions from the salaries in the form of TDS (Tax Deducted at Source), etc.

Understanding business finance basics is imperative to a successful business. Without this money management can become complicated and difficult to track. Thus, it pays to get a sound understanding of how the business finance works and use it for making the business decisions.

numberz

What’s new this march

GST Home!

  • GST deadline is almost here and numberz is chasing it all the way! We are sweating and slaving to make sure that you are able to transition to GST smoothly so that you continue to enjoy the awesome numberz experience.
  • We have made it more real for you – you can get a sneak peek of the shape of things to come. Just head to ‘Tax Filing’ tab on the panel. You would get a glimpse of GSTR1 and other filings.  You can also follow the space to keep yourself updated with knowledge, processes and our offerings.

 

iOS App Release

  • The numberz web application that you love has a soulmate! The swanky new numberz iOS app is up and running on the apple store – in an all new avatar! Carry your business with you. Use the app to create and send invoices on the move. Spend and record your expenses instantly. All your business numbers with you always! Download the app now from here

 

Re-imagined Cash flow graph on the home/dashboard page

  • Based on your feedback, we have re-imagined the cash flow graph to be more straight forward in understanding where your cash flow is trending relative to the invoices raised and expenses incurred. Take a look and let us know what you think! Along the way, we have also fixed some issues with our Invoice, Expense widget.

 

Revamped Weekly Dashboard

  • Your favorite Monday morning report has got a makeover! Now get your entire business snapshot straight in your inbox and get a leg up on your financial planning – as you begin your work week.

 

Other nifty improvements!

  • You can now create invoices with or without tax options. Choose the applicable tax option and decide if you want to include or exclude it from the final published invoice.
  • No need to keep clicking on pages while looking for bank data or bills. You can scroll down infinitely and see all of your data on one single page.
  • The date you signed up on numberz is a landmark date for your business! You can see the date in the settings tab!
GST Registration

How Will GST Impact the e-com Industry in India?

The e-com industry is booming ever since it ventured into the Indian business industry. Unfortunately, it has to deal with a very complicated taxation system. There are all kinds of indirect taxes levied by both the State and the Central government. The digital payment systems such as e-wallet and credit card/net-banking, etc. also add more woes for the dealers/operators. However, this will change soon.

From 1st July(tentative), the government is going to replace the current taxation regime with a new GST regime. This is expected to bring a number of significant changes that will not only make tax calculations easier but also bring transparency in the entire system.

If you are a merchant who is selling goods/services online, then you are required by the GST law to get your registered irrespective of your turnover. But there’s more.

In this post, we will learn about how the GST will impact the e-commerce industry specifically.

Elimination of Tax Arbitrage Advantage

In the current taxation system, the rates of several taxes such as VAT vary from one state to another. For instance, the rate of VAT on mobile phones in Goa is 12.5%, but in Kerala, it is a modest 5%. So, the merchants based in Kerala can offer low prices to their customers on the e-commerce portals and have an arbitrage advantage over others.

With the implementation of GST, however, all the states will have to levy the same tax all across India. Thus, no merchant will be able to get an unfair advantage on the pricing over others.

Faster Delivery of Shipments

The supply chain of the e-com industry is today crippled by a variety of regulations and compliances that not only make transportation of goods complicated but also lead to huge delays. However, with GST the process is expected to become a lot smoother. E-com operators will be able to deliver the goods to their customers faster, mainly because of the elimination of tax collection at the check posts which cause long queues today.

Easier Identification of non-Complaint Merchants

Once GST is implemented, it will become almost impossible for the merchants to misrepresent their sales. This is because they will need to report their sales online through a common portal. They will need to file the report on a monthly basis along with the GSTIN of their aggregator (owner and manager of the online portal such as Flipkart, Snapdeal, etc.). Even the aggregators will have to disclose their sales and returns along with the details of their merchants.

Another major change that GST will bring is the implementation of public compliance rating. Through these ratings, the aggregators will able to easily identify the merchants who are irresponsible with their tax filings and detach them from their platform for a better customer experience.

Tax Collection at Source (TCS)

According to GST every e-commerce aggregator has to collect a 2% tax called the TCS on the total value of the taxable goods supplied on their platform.  Consider the example below to get a better idea how this works:

Let’s say E-biz is an online shopping portal, and MobileZone is a seller on this portal. So, if MobileZone sold goods of the total value of Rs. 100,000 in a day, then E-biz will collect Rs. 2,000 from it in the form of TCS. The same follows for all the other sellers on the platform.

GST is to bring many major changes in the Indian business realm, and e-commerce is no different. While the existing online sellers may find it troublesome to adapt according to the new regime, they are likely to benefit in the long run.

how to manage cash flow with a small business loans

How to Manage Cash Flow With a Small Business Loan

Cash flow is the lifeblood of every business, whether it’s big or small. However, when small businesses or startups have to take business loans, it changes everything. Not only the business has to maintain enough cash flow so that they can pay for inventory, staff, and other expenses but also the loan installments as well. Money management also becomes a challenge as there are several factors to keep an eye on.

If you are having difficulty in managing your business cash flow along with a small business loan, then here are a few tips that can help you:

Planning Ahead

Don’t leave any room for surprises. Nothing is more daunting than desperately searching for cash when you have to pay your employees or the loan EMI that’s pending. It always helps to keep a record of your previous cash flow statements and expense reports when you have to anticipate future expenses. This will help you maintain a healthy cash flow as you can easily check where your money is going and what’s to come in future.

Shrinking Cash Outflows

Running a business along with a loan can make it difficult to stay cash flow positive. While you can’t usually reduce your loan EMIs easily you can still reduce your cash outflows to some extent by:

  • Buying used equipment: Why invest in 100 new computer systems when you can get used ones for less than half the price? If you are lucky you can get them in excellent condition at a local auction or at a classified ad posting website.
  • Cutting Down on Luxuries: Hosting weekly office parties can be good for boosting the morale of your employees, but when you have to save money such kind of luxuries can be avoided, at least until the loan is fully repaid.
  • Finding a Better Provider: Many businesses depend on vendors who supply hardware or software services to them. Maybe you can replace your existing vendor with someone else who is providing equally good services at better prices.

Securing a Line of Credit

With the rise of new FinTech companies, even small businesses are now able to enjoy a variety of financing services. One of these is Line of Credit or LOC.

An LOC is akin to traditional loans, but you only need to pay interest on the amount withdrawn. For instance, say you secured an LOC of Rs. 3 lakhs from a financial institution, then this is the amount of credit available to you. You don’t have to pay a penny until you actually withdraw the money. So, if somewhere along the way your business runs into some problems with the cash flow then you can withdraw a portion (or even full amount) of the credit amount, say Rs. 1 lakh. With this, you only need to pay the interest and the fees (if applicable) on the withdrawn amount only, which in this case is Rs. 1 lakh.

LOC is a really convenient and affordable option if you want leverage when you have a business loan but need to maintain cash flow at the same time.

Becoming Stringent With Payments

Do you let your customers delay payments without any repercussions? This could be extremely bad for your business. You can’t organize your expenses and keep the cashflow under control unless you get your payments on time. You can thus create a strategic process for dealing with delinquent payers that could involve:

  • Sending an initial email 10 days following receipt asking for payment.
  • Calling up the customer directly after 20 days for the payment.
  • Sending away a clerk to the customer’s address in person for payment collection.

Being nice is one thing, but in business you should not let your emotions affect your decisions. You can’t run your business successfully if won’t put your feet down when needed.

 Embracing Technology

Since small businesses often have to struggle to create an identity and obtain market share, it doesn’t help that they have to track their expenses as well which alone by no means is a walk in the park. Thus, it helps to have a specialized software that can do all the formatting, updating, and calculation of all these expenses for you. If anything, this makes one less thing to worry about, and you can use the time saved in building your business.

Cash flow Management at a Whole New Level

A comprehensive business software can greatly improve your existing cash flow by limiting the margin of errors in calculations and expediting invoicing and payments altogether. Here is how you can make the most of it:

Organizing Your Billing Schedule

You should keep a track of pending payments and send the invoices on time every time. This ensures that your cash flow doesn’t dry up and your business stays operational. You can also take care of your loan payments without worrying about debt accumulation when you know that everything is on schedule. Managing the same without an automated system can be quite difficult, and thus not even advised by most professionals.

Keeping the Pricing in Check

Are you charging adequately for your services and products? Many times businesses become so caught up with expansions and other business operations that they delay raising prices with inflation, etc. This can be detrimental to the cash flow. However, with a billing software you can easily check if you are imposing reasonable tax on the products, and price them adequately as well. You may need to charge certain clients more due to some extra services, their location, or requirements, etc. This can make creating custom invoices for them difficult. With an Invoicing software, you can easily customize a base template depending on your clients. You can add or delete certain fields from the invoice as per your requirements and send custom invoices in a matter of minutes.

Analyzing Weekly Cashflow Statement

Monitoring your cash flow is extremely important to ensure there is a healthy balance between the cash that’s incoming and outgoing. There are so many expenses to cover, loan payments to take care of, employees to be paid, and more. At the same time money can come from various sources- individuals, businesses, and more. The best way to review these transactions is to use a billing software that can provide all the details in an organized and simple manner. You can check these details on a weekly basis to ensure you are on track. Even if for some reason you notice that the cash flow is depleting you can pinpoint the weakness and take appropriate measures for restoration.

numberz is one of the few business management software in India that comes with a full range of tools and services that can take your company to the next level. In an industry where businesses are facing neck to neck competition, automated software can certainly give you an edge and improve the cash flow.

Everything You Need to Know About Filing GST Returns

The GST Council recently released the final draft of the laws governing CGST (Central GST) and IGST (Integrated GST), and efforts are in full swing as we get closer to the implementation date i.e. 1st July 2017.

According to the GST regime, every taxable person has to submit their Tax details online through the GST portal at https://www.gst.gov.in.

There are in total 4 types of forms that every normal taxpayer will have to fill and submit in the new GST regime. These are:

Return Form What to file? By Whom? By When?
GSTR-1 Details of the outward supplies that are taxable under GST Registered taxable supplier 10th of every month
GSTR-2 Details of the inward supplies that are taxable under GST Registered taxable recipient 15th of every month
GSTR-3 Monthly GST returns that are based on the details of outward supplies and inward supplies Registered taxable person 20th of every month
GSTR-9 Annual Return Registered taxable person 31st December of the next financial year

GST filing

Image Source

Details to be added in the returns:

GSTR-1

  • Your business name, GSTIN, and the period for which the return is filed.
  • Details of the invoices issued in the previous month along with the taxes paid on them.
  • Details of the advances paid for a supply to be delivered in the future.

GSTR-2

GSTR-2 will be prefilled based on the details provided by you through GSTR-1. You will need to just go through it, and make changes if required.

For instance, if you have bought raw material from a certain company A. Then company A will file a GSTR-1 form and put your name as the buyer in it.  As you will check your GSTR-2 form, you will find these details already filled. You will just need to verify the auto-populated details of the purchases made by you.

GSTR-3

GSTR-3 is just GSTR-1, and GSTR-2 put together. Just like GSTR-2 the GSTR-3 form is also auto-populated from the information received. You just have to approve the details provided in it, which are:

  • Details of the cash ledger, liability ledger, and ITC ledger.
  • Tax payment details of different taxes- SCGT, CGST, and IGST.
  • The option of claiming a refund for excess payment.

GSTR-9

GSTR-9 sums up the transactions and tax payments made in a financial year. So, you need to fill all the details of all the monthly returns along with the collective tax payment details.

Composition Businesses

The government has issued a Composition Scheme to make GST compliance easier for small businesses. If your annual turnover does not exceed Rs. 50 lakhs then you can opt for GST payment under the composition scheme. By doing so, you have to file returns in the following manner:

Return Form Frequency Due Date Details to be included
GSTR-4A Quarterly NA This form will be prefilled/auto-populated with the details provided by your supplier via form GSTR-1
GSTR-4 Quarterly 18th of the next month Details of all the outward supplies of goods and services along the prefilled details of the form GTSR-4A. If there are any changes required in the Form GSTR-4A then you can also add those in the Form GSTR-4.
GSTR-9A Yearly 31st December of the next financial year Combined details of all the quarterly returns along with the tax payment details.

 

How to file GST Returns?

Since GST returns can only be filed online in a digital form, you need to login in the GST portal with your credentials. Otherwise, you can also prepare the returns yourself and submit the same through a facilitation center or a tax return preparer (TRP).

Every business will be assigned a unique identification number called the GSTIN number. You will be filing your returns against the very same number.

GST has also proposed to impose an automated late fine for those who don’t file the returns on time. This is to discourage non-filers. For each day of delay, you will have to pay a fine of Rs. 100 (tentative), with a maximum limit of Rs. 5,000. In the case of annual return again the fine is Rs. 100 per day, but the maximum limit is 0.25% of the aggregate turnover. Thus, be sure to file the returns on a timely basis.

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6 Reasons Why You Shouldn’t Use Excel to Manage Finances.

  1.  If only Excel was designed to create professional invoices or email them.Create Professional Invoice

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  3. If only Excel could talk to your bank.Auto Reconcile your bank account

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Submit your contact details & we will tell you how numberz helps you manage business finances.

 


GST uplifts india

What is GST Input Tax Credit? How Does it Work?

The Goods and Services Tax is a game-changing reform for the Indian economy as it will bring the net applicable tax on goods and services down to a great extent, and make the very act of doing business simpler and easier. However, one of the biggest features that GST will bring to the table is the elimination of cascading effect of taxes through Input Tax Credit. But what is it anyway?

Simply put, Input Tax Credit allows you to reduce the total tax you pay on the goods/services you are selling. For instance, in the traditional system when you buy raw materials as inputs to produce and sell a certain product you pay tax on them. Similarly, when you finally sell the finished product you again have to pay a tax on it. Input tax credit allows you to eliminate this repeated tax. So, using the Input Tax Credit, you can deduct the tax you have paid on the inputs from the total amount or the final amount at the point of outputs.

Let’s consider an example to understand how ITC makes a difference in our current taxation system.

Selling a Product in the Current System

Let’s say a dealer A from Mumbai sells a product worth Rs. 1,000 to another dealer B in Nagpur. After levying VAT @ 10% the cost of the product becomes

Rs. 1000 + 10% of Rs. 1000 = Rs. 1000 + Rs. 100= Rs. 1100

Now, dealer B keeps the profit margin at Rs. 1000. So, the selling price of the product becomes:

Rs. 1,100 + Rs. 1,000 = Rs. 2,100.

Before selling he also has to levy a CST (Central Sales Tax) @10%. Thus, the actual selling price, i.e. the price the dealer C in Chennai will have to pay becomes:

Rs. 2,100 + 10% of Rs. 2,100 = Rs. 2,100 + Rs. 210 + Rs. 2,310.

GST Registration india

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Selling a Product in the new GST System

Taking the same example, the product is sold by the dealer A to dealer B at Rs. 1,000. However, in the GST regime, there are just two indirect taxes instead of VAT, which are CGST (Central GST and State GST). Let’s say they are both levied @ 5% each.

Thus, the price becomes:

Rs. 1,000. + 5% of Rs. 1,000 (CGST) + 5% of Rs. 1,000 (SGST)= Rs. 1,000 + Rs. 50 + Rs. 50= Rs. 1,100

Now, dealer B sells the product to the dealer C in Chennai after adding his profit margin i.e. Rs. 1,000. Thus, the selling price is:

Rs. 1,100 + Rs. 1,000 = Rs. 2,100.

Since it is an inter-state supply of goods and services; the center will collect another tax called Integrated GST (IGST).

If IGST is levied @ 10% then the tax amount is:

10% of Rs. 2,100= Rs. 210

However, the credit of both CGST and SGST can be taken against IGST.

Thus, the net applicable tax will be:

IGST- CGST-SGST= Rs. 210 – Rs. 50 – Rs. 50= Rs. 110

and the final price of the product is:

Rs. 2,100 + Rs. 110 = Rs. 2,210

Thus, this is how GST eliminates repeat taxes and makes the final cost of a product more reasonable.

Now, ITC has its advantages, but not everyone can avail them. You must satisfy the following conditions in order to use GST Input Tax Credit:

  • You must be registered under the GST Common Portal.
  • You can only claim ITC on those goods and services that have been used for commercial purposes.
  • You can only claim ITC for zero rated (exports) or other taxable supplies.
  • If you have sold or transferred your business then the unused ITC have to be transferred to the new business.
  • You must possess a valid tax invoice or relevant customs importation documents (in the case of imports).
  • The tax invoices must be issued under the name of the registered person.

Practical/Relatable Examples on How to Claim ITC under GST

Broadly speaking, there can be three different situations in which you can claim ITC:

  1. When you are liable (or have already applied) for GST registration

If you have been registered for GST then you are allowed to claim ITC. However, you must to do it within 30 days from the date you become liable for GST registration to avail the benefit. For a better understanding take a look at the example below.

Let’s say that you are a manufacturer of blankets and have crossed the threshold limit for GST registration on 5th November 2017. You have raw wool in stock worth Rs. 2 lakhs and have paid a GST @ 18% i.e. Rs. 36,000 on it. So, you must apply for GST registration before 5th December 2017 (within 30 days) if you want to claim the ITC i.e. Rs. 36,000.

  1. When you decide to register for GST on your own accord

Even if you have not crossed the threshold limit for GST registration and thus not liable, you can still apply for it voluntarily. By doing so, you automatically become eligible for claiming ITC.  However, in this case you can only claim ITC on inputs on the goods held in stock on the day before the registration has been granted. Let’s consider an actual example now.

GST Registration india

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Let’s say you run a shoe store and even though you are not liable for GST registration you apply for it voluntarily on 26th September 2017. Thus, you are eligible for ITC on inputs held in stock as on 25th September 2017.

Circumstances in which you are ineligible for ICT

There are certain circumstances that make you ineligible for claiming ICT. These are:

  1. When purchased goods and/or services are used for personal consumption

Say you bought electronics worth Rs. 1 lakh from the manufacturer and paid a GST of Rs. 18,000 (18%). However, you picked a TV worth Rs. 10,000 out of the complete order for yourself. Thus, you can’t claim for the GST paid on the full amount but only on:

Rs. 1,00,000- 10,000 = i.e. Rs. 90,000

Since GST on Rs, 90,000 is = 18% of Rs. 90,000= Rs. 16,200. Thus, you can only claim an ITC of Rs. 16,200 instead of Rs. 18,000.

  1. When goods are stolen, damaged, lost, or disposed of as free samples or gifts

Taking the previous example, if you have bought electronics worth Rs. 1 lakh from the manufacturer and paid a GST of Rs. 18,000 (18%), and if one TV worth Rs. 10,000 gets damaged to the point that it is useless then again you can only claim an ITC of Rs. 16,200.

  1. When payment has not been made within 3 months from the date of invoice of a certain service received by you

For example- say you have received marketing service from a certain company and they have charged you:

Rs. 30,000 (cost of service) + Rs. 5,400 (GST at 18%) = Rs. 35,400

If it has been over 3 months and you haven’t cleared the invoice then the ITC i.e. Rs. 5,400 will be added to your liability and cannot be claimed.

There are many other situations in which you cannot claim ITC. For instance, you cannot claim ITC on motor vehicles and other conveyance, cosmetic surgery, outdoor catering, food, and beverages, etc.

Any more questions regarding GST? Ask in comments below.