With the Goods and Services Tax (GST) set to roll out on July 01, 2017, expectations and anxieties are high with individual taxpayers and businesses trying to gear up for a brand new tax regime.
Components of GST
To be able to make the most of the new indirect taxation law, taxpayers need to understand its components well.
The GST Council which was set up by the Central Government to execute GST implementation, has proposed a new tax framework-structure for GST.
First and foremost, GST represents a “One Nation, One Tax” outlook, which is necessary to do away with multi-tax regimes that lead to inefficiencies such as cascading taxes, levy of excise at the point of manufacturing and lack of uniformity in tax levies. Currently, Goods and Services are taxed under various disparate tax categories such as Excise Duty, VAT or Central Sales Tax, Service Tax (in the case of services dispensed) and Customs Duty (for imports). Some of these taxes are levied by the Central government, and others by the state government. A unified approach— GST— will help do away with these complexities by enabling a single tax regime right from manufacturer to consumer. It is important to know that GST is a destination-based tax i.e., the tax is credited to the taxation authority whose jurisdiction prevails at the place of consumption (also called the place of supply). Moreover, GST will be levied on value-addition, by allowing for input tax credit at each stage of the transaction chain.
GST will have four slabs of indirect taxation: 5%, 12%, 18% and 28%, with goods and services attracting any of these slab percentages depending on various factors such as being a luxury good/service. The current indirect tax structure will give way to a Dual GST model, with the Centre and States simultaneously levying GST on a common tax base, as follows:
- Central GST Bill (CGST): For intra-state transactions related to supply of goods and/or services, levied by the Centre.
- State or Union Territory GST Bill (SGST or UTGST): For the supply of goods and/or services in the States and Union Territories, levied by the States/Union Territories.
- Integrated GST Bill (IGST): For inter-state transactions and imports related to supply of goods and/or services, carried out by the Centre.
Under this structure, the CGST and SGST/UTGST will be levied simultaneously on the same price or value. Here is an example of how this will happen: Consider a steel supplier who manufactures in Jharkhand and supplies steel to another company within Jharkhand. Let us assume the rate of CGST to be 10% and SGST to be 7% and the selling price of the steel to be Rs. 100. The supplier will charge the client a CGST of Rs 10 and SGST of Rs 7. The supplier needs to deposit Rs 10 in his Centre taxation account, and Rs. 7 in the State taxation account. Due to input credit facility, the supplier has the option of setting off the total payment (Rs 17) against the tax he paid on his purchases or inputs. However, these credit values cannot be mixed—for CGST-setoffs he can utilize only the CGST credit; for SGST-setoffs he can utilize only SGST credit.
A Dual-GST is particularly suitable for the Indian economy because in India both the Centre and States are assigned the duty of levying and collecting taxes. So far, the Constitution clearly demarcated the tax levying and collection duties of the Centre and State, with the Centre responsible for taxing the manufacture of goods, and the State responsible for taxing the sale of goods. For services, only the Centre was allowed to levy Service Tax. To override this segregation of power, and enable the smooth implementation of GST, a Constitutional amendment (Constitution Act, 2016) was made so as to simultaneously empower the Centre and the States to levy and collect this tax. With this amendment, the Dual GST regime will now align well with the fiscal federal protocols of India.
Taxes subsumed under GST
The following are the disparate taxes (levied by the Centre and States) which will be subsumed under the new dual-GST regime.
(A) Taxes currently levied and collected by the Centre:
- Central Excise Duty
- Duties of Excise (Medicinal and Toilet Preparations)
- Additional Duties of Excise (Goods of Special Importance)
- Additional Duties of Excise (Textiles and Textile Products)
- Additional Duties of Customs (commonly known as CVD)
- Special Additional Duty of Customs (SAD)
- Service Tax
- Central Surcharges and Cesses so far as they relate to supply of goods and services
(B) Taxes currently levied and collected by the States:
- State VAT
- Central Sales Tax
- Luxury Tax
- Entry Tax (all forms)
- Entertainment and Amusement Tax (except when levied by the local bodies)
- Taxes on advertisements
- Purchase Tax
- Taxes on lotteries, betting and gambling
- State Surcharges and Cesses so far as they relate to supply of goods and services
The taxes to be subsumed were decided after intense debate and consideration of some core principles that were in line with the GST ethos. Each tax was first examined to ensure it qualified for indirect taxation and was related to the supply of goods or services. Moreover, a tax which was to be subsumed needed to be part of the transaction chain right from imports through manufacturing to the provision of services and the consumption of goods/services. Another important criteria to allow a tax to be subsumed was that the subsumation should lead to free flow of tax credit at Intra- and inter-State levels. Also, the revenue considerations of both the Centre and the State were taken into perspective while arriving at the final list of subsumed taxes.
Clearly, the change is huge, and the sooner consumers and businesses get familiar with the implications on Term finances, the better they will be equipped to benefit from the new GST reforms.
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Following an agile methodology for development is a no-brainer for any start-up. The environment is fast paced, catering to a dynamic business where release cycles are frequent. Often, the common pitfalls of this method also show a lack of emphasis on planning and documentation while customer expectations sometimes are not clear. To mitigate this, a hybrid of agile and waterfall approaches enables start-ups to move towards a mature business. To do so, the start-up must;
– Identify problems of the business
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Your business logic and data is your Intellectual Property. As a Fintech company, this becomes the most critical piece of software development. It is important to protect your data while also facilitating growth with the exact same data. How do you draw this balance?
Build your logic and algorithmic layer around your data and an external layer that does not directly interact with your data set. This permits external endpoints to be consumed by growth partners as well as reduces development efforts for building tech for internal teams.
Enterprise applications are often built using a monolithic approach or as a single unit. Although it’s a natural approach to development, it can be frustrating because of multiple dependencies on modular structure and deployment to the cloud also becomes a challenge.
In contrast, Micro-services architecture equips you to independently deploy services or pieces of software without large dependencies on other services. These services or pieces of software ultimately add up to become a single application while running its own suite of processes and mechanisms.
Additionally, in a Fintech setup, technology is built to cater multiple teams – both internal and external and having a micro-services architecture easily allows horizontal scaling.
In a start-up, it’s a good idea to prototype development. Prototyping facilitates quick delivery of a piece of software and a better understanding of future product development.
Post prototyping, it’s important to pick the right framework for a full-fledged and scaled application. This is where building code that can be re-used in multiple services becomes a factor of efficiency in development. Building custom libraries (back-end or front-end) and even choosing the right frameworks ensure ease of development across resources and knowledge transfer. A choice of using AngularJS as a front-end framework allows for creating directives specific to custom applications and promotes reusable components.
Build vs Buy
A classic point of debate and contention is always build versus buy. There are multiple points to consider while making such decisions in a growth stage start up to create a fine balance between the two.
Often, out of the box or integrated solutions provide quick solutions for increased productivity to a business need but come at several costs, such as pricing and rigidity of use. Sometimes these solutions are not compatible with existing software or custom solutions.
Custom-built solutions provide competitive advantages, builds intellectual property and fit a specific business need but also comes at several costs, such as time for development and uncertainty in product definition.
A hybrid approach can be an effective way of mitigating the disadvantages of build or buy approaches. At times, building on top of or integrating an existing product into your custom built solution adds greater value to the overall business product. An example of such a solution can be integrating a good workflow management tool into your custom CRM application.
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Intimidated by the long-drawn process of getting a loan approved from conventional sources such as banks and traditional NBFCs, schools in India often discard the idea of borrowing funds for improvements on their campus. They try to make the most of their limited available funds, even if it means some degree of compromise on the quality of upgrades they had planned for the school.
Such an approach does not bring any benefits in the long term. In some cases, it may even backfire. For instance, if a school purchases low-quality furniture due to inadequate funds, which causes discomfort to students/staff using it for 6-7 hours every day, it may not only tarnish the school’s reputation but also cause serious health problems for the users.
What comes as a relief is that school loans are available on easy terms from FinTech companies that are essentially NBFCs but have a streamlined digital lending model for quick disbursal of funds. From a loan for buying school furniture to any other loan for school development, they can provide funds within a week of application receipt. The application needs to be substantiated by only the soft copies of a few documents verifying the credibility of the school.
So what are the benefits of leveraging a quick school loan from such a source? Does it lead to more profitability for the educational institution?
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Enable improvements in infrastructure and purchase of new teaching equipment
FinTechs can provide a loan for school construction which helps the borrowing institution to divide students of the same class into different sections. With this, teachers can give more attention to each student, and the quality of teaching improves. The building structure can also be expanded when a school decides to admit more students or has to advance its existing classes to higher grades.
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Invigorate interest in admissions
The most direct impact of bringing improvements in school facilities is a rise in the number of students who want to be a part of the institution. While senior students can understand the benefits of moving to an optimally planned school on their own, the parents of younger children who join an academy from kindergarten will also try to place their children in such a school. Provision of excellent facilities and keeping pace with new techniques that transform the learning environment is a natural incentive for more admissions in a school.
The good repute of a school can instantly attract students who move to the city due to their parents’ job transfers and have to find an educational institution in minimum time to avoid loss of studies in an ongoing academic session.
Collection of more fees
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Whether you need a small loan for school furniture or up to Rs. 50 lakh to finance any development process in your school, Capital Float ensures that you get it most conveniently. Visit https://www.capitalfloat.com/school-finance to apply for your fund today.
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Unsecured small business loans are considered as one of the safest ways to raise short-term finance for meeting the working capital requirements or urgent funding needs of a business. The safety feature is attributable to the fact that these unsecured small business loans do not require any collateral or security in the form of assets of a business. Most small businesses do not have adequate assets to offer as collateral. The elimination of the need for collateral makes it possible for such businesses to raise loans.
Recent years have witnessed the launch of new-age lenders and the introduction of products that have revolutionized unsecured business loans in India. This is not merely via the easy access to funds, but also offering customized solutions for different businesses and tying the repayments to the accounts receivables or inflows from credit card sales of a business.
Ensure uninterrupted business operations
Often small and medium enterprises (SMEs) need funds for their daily operations to ensure the smooth functioning of their business. Funds may be required to purchase raw materials, pay wages and salaries, clear utility bills and meet unexpected expenses. SMEs may also need immediate funds to grab a business opportunity or take advantage of a seasonal upswing in the demand for their products. These funds are required before a business services its customers and raises invoices. The lack of availability of funds at this time can threaten the very survival of a business and, at the least, could throttle any growth opportunities.
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Protect Your Bottom-Line
Most SMEs are unable to meet the eligibility criteria put forth by traditional financial institutions. In fact, it was impractical to approach banks for urgent liquidity needs, given their long-drawn approval processes. Thus, most businesses were left to the mercy of unorganized money lenders who would charge steep interest rates.
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Flexible Repayment Options
Unsecured business loans come with flexible repayment options. The term of the loan could range from six months to three years. The repayments can be on a daily, weekly, fortnightly or monthly basis. Some products like Capital Float’s Online Seller Finance and Merchant Cash Advances link repayment to the operating cycle or receivables and credit card sales of the business. This flexibility puts a business in a better position to make repayments. Since the repayment is a specific percentage of the monthly sales, there is no added pressure on the borrower to repay the loan. This also ensures that the borrower is not stressed about repayments when business is slow.
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Defaulting on Repayment of Unsecured Small Business Loans
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