Are you prepared to understand the basics of Income Tax as a Young Entrepreneurs.
So you have just started your startup business and are on the path of self-exploring your financial needs, right? And one of the most irritating aspect is going through your taxes.
Being in India, knowing about tax is not so easy but has become a necessity for your daily business transactions. Let's explore one step at a time specifically on Income Tax.
Confusion and their required explanations
What is all about income tax?
A tax which is paid to the government is called income tax. Based on your income you earn certain slab need to be paid in the form of tax and when your income increase the certain slab you need pay more to the government.
Why should I pay tax on my hard earn money?
Every citizen is obliged to pay tax to the government as per the law - Income Tax Act. The government then utilize for further development of the nation.
How much am I supposed to pay?
the tax is categorized depending on your income slab your salary falls in. The percentage of the tax varies as below:
- Man, Women or a Senior citizen which category you fall under.
- A person earning below 3,00000 CTC- no tax deducted.
- Earning between 3,00,000 to 5,00,000 will be 10% of his income.
- Similarly, for earners between 5,00,000 to 8,00,000 will be 20% of his income and so on.
- 30% if income exceeds from Rs. 8, 00,000.
GST (Goods and Services Tax)
Will GST solve the issue of the general public in India and how it is impacting on India?
What is GST in India?
Goods and Services Tax is one form of indirect tax for the entire nation, which will make India as the uniform market. GST can be termed as a single tax which is applied to the supply of goods and services. Being a destination based tax which is implied on value-added products or services at each stage cause credits of input taxes and whatever paid at the procurement of inputs will be a clear picture for the government. Here, the consumer will bear only the GST charged at the final stage which will be charged by the dealer as supply chain, with set-off benefits wherever applies.
Before GST was levied, there were so many taxes like excise duty, VAR, entry tax, octroi, similarly service tax like entertainment tax, luxury tax, food tax etc. Now, there will be only single tax i.e GST and this will help India the dream of One Nation, One Tax feasible.
What types of taxes will be covered under GST?
India being a federal country, Central Government and State Government both are eligible to levy taxes.
- - Central GST (CGST)
- - State GST (SGST) / Union Territory (UTGST)
- - Indian GST (IGST)
- - SGST will be levied with CGST for any supply made within the state.
- - UTGST would be levied with CGST for any supply made within a Union Territory.
- - IGST would be leviable on Import or Inter-State supply of goods or services or both. IGST would be equivalent to the sum total of CGST and SGST/UTGST.
Benefits of GST
- - Many Taxes have been removed from VAT, CST, Service Tax, CAD, SAD, and Excise.
- - Lower tax compliance and a simple tax policy
- - Cascading effect of taxes has been removed i.e removes the tax on tax.
- - Manufacturing costs have been reduced, where the consumer goods will be likely to come down.
- - peace for the general public where they have to pay less money to buy the products which were costly earlier.
- - There is an increase in demand and consumption of goods.
- - Blackmoney circulation will be controlled for traders and shopkeepers by doing a mandatory checking.
- - Production of goods will rises due to increase in demand and supply.
- - Indian economy will have a major increase in the long run.
What will be the impact of GST in the Indian market?
- - A lot of burdens will be reduced on producers and foster growth through more production.
- - taxation structure
- - myriad tax clauses
GST take cares of the above problems by providing a tax credit to the manufactures.
- - Other tax barriers, such as check posts and toll gates, prevent wastage of preserved items are transported. Penalty on this wastages cost is charged heavily due to higher needs of buffer stock and warehousing costs. GST as a single taxation will reduce such huge roadblocks.
- - Transparency in the system for a customer to know exactly how much they need to pay for what products or services.
- - GST will remove customs duties which are heavily charged on exports. Due to low cost on transactions, the nation's competitiveness in foreign markets will increase.
Broadly speaking, services are expected to become costlier under the GST Act, which will be 15% then the current service taxes. Whereas, GST is expected to bring down prices on manufactured goods as compared to today's taxes (central excise 12.5%, State VAT 5%-15% etc.) where the GST lowered down to 5%, 12%, and 18%. Due to effective rates of indirect taxes some manufacturing prices would come down and would be much relief for the general public.
Account Terms - The Importance of Accounting in 2018
The main objecting of accounting is to maintain records, summarize and provide a financial statement about business to different assigned users to access a vast range of data, it is very much important to have certain means to achieve that goal, which is call ACCOUNT and which is one of the important aspects of accounting terms. Let look deep into their efficiency in our practical life.
Accounts main role is to keep records and generate reports about each individual:
- - Assets
- - Liability
- - Equity
- - Revenue
- - Expenses
Complete list of accounts used by the company or business for accounting purpose, which can be accessed by different users depending on the business size and purposes
Financial transactions are classified into certain categories for maintaining records of whats happening within the category during the financial period. As the classification is termed as assets, liabilities, equity, revenue and expenses, each of these items needs separate accounting.
cash in the bank, petty cash, accounts receivable, accounts payable, shared capital, sales revenue, administrative expenses, cost of goods sold - all these categories need their own separate account.
While maintaining a form of account one has an account called T form, which implies of two-sided column one with a Debit note and other with the credit notes. Debit what goes out and Credit what comes in.
How shall i maintain my account?
Decreases And Increases In Balances is a most important term of accounting. Debit and credit side of the accounts are always an imbalance in the form of increase or decrease in the statement of certain account. Accountant tries to maintain the account debit and credit notes at the end of the accounting month for all the accounts depending on category used except for revenue and expenses accounts, are left out with balances depending on the category of the account.
If the asset category increases in balances on the debit side, and decrease in credit side then the accounts will certain implies to have debit balance at the beginning and end of the period. Whereas vice-versa with equity category implies to have a credit balance at the beginning and end of the period. Same goes with revenue category, implies to have increased in revenue accounts is written on credit side and the decrease in debt is transacted on debit side as for expenses it goes vice versa as both revenue and expenses account never carried opening or closing balance. As these accounts are used only certain criteria and for small accounting period and always closed by making a transfer of balance accomplished at the time of collateral of the account.
Double Entry principle is still utilized in today's accounting terms by small accounting firms. This business transaction at the time of maintaining records, it always has an important role for debit and credit notes.