India is all set to implement the Goods and Services Tax, or the GST, from July 1, 2017. The intent is to standardise the indirect taxation system in the country, related to the supplies and consumption of goods and services. The new regime is one of the biggest indirect tax reforms pan-India, and one that will directly affect both business owners and consumers to a marked degree. It is thus important to know the whats and hows of the GST rollout.
What is GST?
GST is a new system for indirect taxation. Under this, a new four-tier tax structure has been finalised. Goods and services will be taxed under the slabs of 5%, 12%, 18% or 28%. The highest slab is for luxury items and items such as tobacco. The Union Cabinet has passed four bills for four different categories of tax regimes under the GST, as follows:
Central GST Bill: Applies to the supply of goods and services by the Central government within the boundaries of a state.
Integrated GST Bill: Applies to the supply of goods and services between different states, carried out by the Central Government.
Union Territory GST Bill: Applies to the supply of goods and services in the Union Territories.
The Compensation Bill: An allied bill that will govern the provision of compensation for revenue losses brought on by GST implementation, over a period of five years from implementation.
These four bills together are set to change the tax norms in the country.
Advantages of GST
The GST will prove advantageous at both seller and consumer levels. According to our Finance Minister Arun Jaitley, GST has the potential to boost economic growth by as much as two percentage points. From a business perspective, a number of pros are evident.
Greater compliance: The GST implementation will be reinforced by a backbone of robust IT systems and processes. All taxpayer services will be available online, making tax compliance and operations simple and transparent.
Uniform tax rates: This will ensure that tax structures and rates are common across the country, and will consequently make cross-locational business easier and quicker.
Reduce overlap: Often, a single product, for example, a shirt, being sold is taxed at various stages. With VAT, excise duty and other taxes payable at different stages, payments often roll up to large numbers, posing a cost to the company. The GST will facilitate the removal of different layers of tax levies and will replace them with a single, clear interface.
Cost advantage: Under the GST practice, many local Central and State taxes will be subsumed. At the Central level, the Central Excise Duty, Additional Excise Duty, Service Tax, Countervailing Duty and Special Additional Customs Duty will be subsumed. At the State level, we will see the following getting subsumed: State Value Added Tax or Sales Tax, Entertainment Tax, Octroi, Purchase Tax, and Luxury Tax, to name a few. These measures will reduce the cost of manufactured goods or services, thereby increasing the competitiveness of Indian goods in an increasingly global market.
The end consumer also stands to benefit from the following:
Better tax clarity and planning: Often, consumers are not aware of the taxes that they pay on the purchased goods or services, either due to the confusion caused by multiple indirect taxes or because the tax component is not revealed in the selling price. Such taxes may mask the real cost. GST will help streamline this by having only one tax applied from manufacturer to consumer, enabling tax transparency.
Lesser tax burdens: A single rollout across the nation is bound to bring in efficiency gains. At the same time, a transparent tax process with fewer hidden taxes will help reduce taxes for most commodities, leading to better affordability for the consumer.
The next steps for businesses: Applying for GST
Every business that is currently registered under any existing tax regime has to compulsorily migrate to GST. If your business is not registered under any tax regime, then you have to register for GST only if your aggregate turnover in a financial year exceeds a threshold limit of 20 lakhs liability for payment of tax (10 lakhs for North Eastern states).
If your business is happening inter-state or through e-commerce as an intermediary supplier, then registration is mandatory, even if this threshold limit is not reached. However, note that any casual taxable person or non-resident person is liable to register for GST even if they are not crossing the threshold limit.
Registration/ enrollment for GST is to be completed online under the GST Common Portal https://www.gst.gov.in/ for both taxpayers and businesses. This will be the platform for future filing of returns and tax payments. The government has also appointed GST Suvidha Providers to help with the process. There is no offline process for GST enrolment.
The enrolment is free. In order to log in for the first time into the portal, you must have your username and password that you would have received from the State VAT or Centre Tax Department (these are linked to your PAN). For further logins, create your username and password and begin the enrollment process.
These are the steps to follow for registration:
- Fill in Form GST REG-01-Part A, and key in the PAN number, mobile number and email address. The PAN will be verified online while the mobile number and email ID will be verified through the one-time password (OTP).
- The applicant will then receive an application reference number along with an acknowledgement of application through FORM GST REG-02.
- The applicant must fill the Form GST REG-01-Part B with the applicant’s reference number. The applicant must attach required documents: PAN card, documentation of company such as partnership deed, memorandum of association or incorporation certificate, proof of business such as rent agreement or electricity bill, cancelled cheque of company bank account in the account holder’s name, and proof of key authorised signatories such as list of directors or list of partners with their ID and address proof.
- If any additional information is required, the applicant will receive Form GST REG-03 as notification and must fill in and submit Form GST REG-04 within seven days.
- On submitting all details correctly, the application will be approved and the applicant will receive their registration certificate, called Form GST REG-06. However, if the application is rejected, Form GST REG-05 is sent to the applicant and they will be required to resubmit an application through Form GST REG-07, only if they need to deduct TDS or collect TCS.
This completes the registration process. It is followed by the issuance of a Provisional Registration Certificate (if approved), and thereafter, a final Registration Certificate that is expected to be issued within six months of the documents being verified by the GST authorities. Remember that different business verticals/locations need to be registered separately, as the registration certificate is generated separately for each.
Currently, the portal states that more than 60 lakh taxpayers have enrolled on the GST Portal between November 08, 2016 and April 30, 2017. Please note that the enrolment process has closed from May 1, 2017, and will reopen at a later date. Visit our GST blog to know more about GST and keep track of latest
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We want to be in 100 cities in the next 12 to 18 months: Gaurav Hinduja & Sashank Rishyasringa – Business Standard
Written by Alnoor Peermohamed
Bengaluru-based startup Capital Float, which lends to small and medium enterprises (SMEs), plans to grow its presence from 40 cities to a 100 cities in the next 12 to 18 months. While sellers on e-commerce platforms make up a large chunk of whom the company lends to, it says it will focus more on tier 2 and tier 3 businesses, which might be solely offline but have the potential to grow massively. Gaurav Hinduja and Sashank Rishyasringa, founders of Capital Float talk to Alnoor Peermohamed in the company’s plans. Edited excerpts:
The e-commerce segment is fairly new and there’s bound to be volatility. How do you think that might impact your business?
Hinduja: E-commerce merchants are the core to what we do and it’s an important vertical, but we’ve also diversified outside.
We do loans to a lot traditional SMEs — brick and mortar, manufacturing and service type of organisations because that segment is 30-40 million, whereas e-commerce is 100-200 thousand. I think almost all sellers sell on all marketplaces. And when we underwrite the business, we look at a combination of things. Sales across marketplaces, and how does that look across his offline sales as well, because a lot of sell offline. We look at a holistic view of the business before we actually decide to give the person a loan.
Data on sellers is harder to come by in the offline world. How are you tackling that?
Rishyasringa: You’ll be surprised as to how much data is available on any business in India and that’s very much a big part of the IP we’ve built since the early days. I think what we’ve been able to do is build a lot of pipes for data sources such as Aadhaar, NSDL, and a whole host of other government and legal databases.
The borrower is also able to give us access to a lot of data that we can then use in deciding what terms and what kind of loan to give them. For example, social media is a very interesting input that we consider in our underwriting model.
On the online piece, yes there is some additional data which helps with the speed of lending. So today we give real time approvals to e-commerce sellers in 10 to 15 minutes.
What is your primary source of raising capital?
Hinduja: Like most financial institutions we obviously raise equity right, and we have raised a little over Rs 100 crore from some of the best VCs, but also we have raised debt.
What are your sort of default rates? How are you working to keep them low?
Hinduja: Ironically, a lot of the bank’s defaulters are not coming from the SME sector. They’re actually coming from large borrowers. A lot of what we do is the underwriting, through different data, and we do that to keep our credit costs, which are defaults, et cetera, really low.
Today they are very low, I’d say 80-90 per cent better than any NBFC that lends to SMEs out there. That said, it is still early days. This is a lending business at the end of the day, there are going to be defaults.
What do you think will happen when guys like Alibaba increase their focus in India? Where do you fit in?
Rishyasringa: B2B e-commerce has the potential to be far larger than B2C e-commerce in India. And we think what Alibaba has been able to achieve in China and in India with its SME base for exporters and importers is tremendous.
We are partners with Alibaba. You can infer from that, that we’re already active in the space and its part of our strategy.
How is this partnership going to work?
Hinduja: They’re going to look at us to help get more SMEs to become active Alibaba users. But at the same time a lot of their SME merchant base will require financing, whether it’s for domestic transactions, or cross border transactions. They will look at a financer that really has the speed and the agility to meet the SMEs requirements in that sense.
What are your growth plans?
Hinduja: We want to be in 100 cities in the next 12 to 18 months and obviously a lot of that growth is going to come from tier 2 and tier 3 towns. Because banks really don’t have a presence there.
While people and SMEs in the top 8-10 cities can still access a bank branch, bank branch penetration in those tier 2 tier 3 towns is almost negligible. I think that’s where we’ll see a lot of growth and through the make in India and e-commerce stuff you’ll see a lot of business growth in those cities as well.
What sort of regulatory hurdles do you see yourselves having to cross?
Rishyasringa: Actually in the financial services space I think we’ve got a very proactive regulator and what you’re seeing in these payment banks, small finance banks, e-KYC, I think these are all steps in the right direction and we obviously hope that we continue to see these steps.
News piece sourced from Business Standard. Read the full piece here.
Oct 24, 2018
Time is money. No phrase proves this statement better than when you own a growing business.
As you strive to achieve your business aspirations, juggling responsibilities and managing activities end-to-end sums up a typical work day. You simply cannot afford to compromise on any of the processes at hand, because it might have a profound impact on the growth of your venture. The trick is to focus your productivity on the limited resources you have in a time-efficient manner till you can confidently handover the heavy lifting to experts. Successful businessmen will tell you the same, but in two words: time management.
Here are our favorite tried-and-tested time management tips for small business owners to save you time and make running your business easier.
1. Fix a Schedule and Stick to it
The best way to accomplish a productive day is to show up at work with a clearly defined set of goals and tasks, preferably hand-written. A disorganized schedule leads to ineptness and wasted hours, eventually leading to a loss of focus on business objectives. Account for every hour of the day, from the time needed for meetings and document review to travel and shopping. Create your schedule with three categories- one for the responsibilities that need to be completed that day, another for those activities that require your attention but can be put on hold and a third with minor tasks that you can work on if you have extra time. Know your downtime- you can use this for short breaks.
2. Focus on ONE Task at a Time
Multitasking might seem like a clever way to do many things within a short amount of time, but it divides your attention among the responsibilities at hand. Being a budding enterprise, this is not a risk that you want to take now. Instead, you can try the ‘Pomodoro technique’. This involves setting your timer for a specified time and focusing wholly on one task before the timer goes off. Repeat this after taking short breaks of 5 minutes between tasks. An efficient way to structure your time, this technique ensures that you devote time for a specific activity regularly.
3. Delegate Work
All small businesses are a one-man army early into their business operations. But your growth journey to becoming a larger enterprise begins when you start delegating responsibilities to expert personnel. Hire people who are dependable to manage tasks you don’t have time for or you are not suitably skilled for. This will give you more time to work on things that you are best at and need your personal attention. Keeping in mind that most growing enterprises might not be sufficiently funded to hire the right people, Capital Float offers Unsecured Business Loans to support the recruitment needs of these businesses.
4. Avoid Distractions
Any means of distraction is harmful for the growth of your business, as the work you do is very different compared to those of your employees. If you think your team members are wasting time on social media, set up a URL blocker on your system. You can forward calls, set up caps on answering emails or designate others to perform repeated tasks, if these are causing you to deviate from your daily schedule.
As you get busier, more people demand your time. Reducing distractions implies training the people around you to respect your time. Your employees tend to consume your time with constant problems or through attempts to garner your attention. Take steps to identify the major time-wasters and keep them at bay.
5. Prioritize difficult tasks
An effective time management hack is to start your work hours with the most challenging task at hand. Despite varying individual notions of productivity, mornings are accepted as the time of the day when you are at your optimum performance levels. This leaves the rest of the day to handle repercussions or developments, and you can work on other priorities with a relaxed frame of mind.
6. Watch out for ‘Shiny Objects’
Many a small business that has just entered the economic space face the ‘shiny object syndrome’ early into their growth phase. Shiny objects, or seemingly bright opportunities, keeping popping up from time to time and they tend to distract you from your business objectives. You can eliminate such time-wasters by asking for agendas before attending any business proposition and comparing new prospects with the value of opportunities at hand.
7. Organize your Work Space
There is no bigger demotivating factor than coming to a cluttered workspace every morning. Not only does it create an unorganized mental space, but according to recent surveys, makes you stay at office longer. Documents categorized into inbound and outbound piles, color-coded filing cabinets, scanning forms onto Outlook, and similar techniques will save you the trouble of rifling through scores of paperwork to find information.
8. Evaluate and Improvise Consistently
The worst thing to do to your business is to continue implementing processes that do not benefit your cause. Most small business owners might be busy with specific projects to spend time analyzing their business models. This is where a quarterly evaluation becomes the most significant of time management tips and strategies. A quarter, or three months, is relevantly sufficient amount of time required to determine the effectiveness of a strategy or a business relationship. Carrying out evaluations at the end of every quarter gives ambitious entrepreneurs better process insights and a chance to move in the right direction.
9. Measure Big Successes & Failures
One of the critical time management skills that a small business owner must possess is goal setting. Define scalable weekly business goals with an emphasis on a particular aspect of your business that you want to focus on, and evaluate the big wins and losses at the end of the week. What makes this strategy so productive is that here, failures are treated as important as successes, as early analysis saves the time that your team might have continued working on them.
10. Leverage Technology
Most small business owners spend more time running a business than growing it. Tasks like staff rotas, invoicing, payroll and tax consume more than 30 hours of productive time every month. With the infinite number of apps and services available online, technology can be used to fill the gap in your current business processes. Automating repetitive tasks such as these will help you save a lot of time to focus on activities that directly impact the growth of your business.
Oct 24, 2018
Plastic money has revolutionised the commercial world in the last two decades, both for consumers as well as business owners. With the recent demonetization, more customers are compelled to use cards to purchase goods and avail services. An increasing number of merchants are installing point-of-sale card machines to ensure that sales are unaffected. After all, a card swipe is undoubtedly quicker and more convenient than cash.
Now, the receipts of those card swipes can help you raise capital to expand your business operations. Whether you’re a retailer, restaurateur, or a small-to-medium business owner whose revenue comes primarily from credit and debit card sales, Capital Float’s ‘Merchant Cash Advance’ is a quick, hassle-free financing option to fund all your working capital needs.
With Merchant Cash Advance, you can receive up to 200% of your monthly sales from card payment machines. The repayment process is entirely hassle-free on your part. Your POS partner repays a percentage of your daily card sales on your behalf as instalment for the loan. The balance amount is paid to you on a daily basis. So, instead of being burdened by hefty fixed repayments every month, you pay an agreed-upon percentage of your daily credit/debit card sales, until the advance is paid in full.
- Loan amount of up to Rs. 1 cr
Traditional banks aren’t as generous when it comes to how much you can borrow. Add to that the piles of documentation and proofs of credit score that you need to submit, which only elongate the process. At Capital Float, on the other hand, you’re eligible for an advance of up to Rs. 1 cr, depending upon your monthly card settlement and ability to repay between a tenure of 6 months to a year.
- Loan tenure of 6 months to 1 year
Every line of business has different challenges and requirements. We understand the importance of providing flexible credit offerings that are tailored to your business need. You can avail Merchant Cash Advance for a period varying between six months to one year. If you have a short-term working capital need, a six-month long loan might be ideal. Similarly, if your need involves securing a larger loan and if you would like to spread out the repayment schedule, you could take the loan for a period of one year.
- Get up to 200% finance on your monthly card machine sales
With Merchant Cash Advance, you can receive up to 200% working capital finance on monthly sales from card machines. As more customers use debit and credit cards to shop, your sales from point-of-sale machines is likely to increase significantly. These sales records can help you avail quick finance that you could channel into running your business. Our sophisticated loan product opens a new avenue of formal financing for you, as you seek credit channels to leverage business opportunities.
- Cash-flow friendly daily repayments
Usually, small business loans have a fixed repayment plan, wherein, you pay the same amount every month based upon the agreed-upon interest rate. At Capital Float, you pay back as per your daily credit/debit sales. Take, for example, if the agreed upon repayment is 15% of your credit card receipts, we will deduct 15% in proportion to how much business you’ve done through the day, until the repayment is done in full.
- Get funding in 3 days
It’s a highly competitive business world, and in case a potential opportunity knocks on your door, the last thing you want to do is wait for the funds to reach you. One of the many USPs of Merchant Cash Advance is its potential for fast approval and disbursal. Through our data-driven competencies, we render a decision within hours and deliver funds to you within 72 hours, so that you waste no time in covering an unexpected business expense or capitalising on a lucrative business opportunity.
- Zero collateral
Traditional banks cover their risk by taking collateral form the borrower while giving a loan. Given the completely unsecured nature of Merchant Cash Advance, you don’t have to put any personal or business assets on the line. All we require is your banking documents for last 12 months, KYC documents, VAT returns for last six months and card settlement statements for 3 months prior to loan application.
- Simple and secure online process
Like many small business loans of this type, you can apply for an advance from wherever you are, as long as you have a computer or cell phone with an internet connection. The procedure is extremely simple, and takes a mere ten minutes of your time. All you need to do is fill out an application form, upload the necessary documentation. The process is designed to be convenient for you. We maintain strict security protocols, safeguarding your data at all times.
Eligibility and Documents
To qualify for a loan at Merchant Cash Advance, you must comply with the following parameters:
- Your business must have minimum operational history of 1 year
- Minimum turnover of ₹20,00,000
- Minimum card acceptance vintage of 6 months
- Minimum monthly card volume of ₹1,00,000
- Minimum of six settlements per month
- Your banking documents for last 12 months
- VAT returns for last six months prior to loan application
- Card settlement statements for 3 months prior to loan application. All acquirer banks, except American Express, are eligible.
- The company’s as well as the promoter’s KYC documents
Fees and Charges
At Capital Float, we conduct business in the most transparent manner. This means, you’re only obligated to pay a processing fee of up to 2% for the loan. There are no hidden or pre-closure penalties during or after your application procedure.
Oct 24, 2018