Tag Archives: Setting up in India

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How GST Works in India

GST is a type of value added tax and a proposed comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level. It will replace all indirect taxes levied on goods and services by the Indian central and state governments. Further, the Goods and Service Tax (GST) is considered to be one of the biggest reforms in India’s indirect tax structure.

 

THE NEED FOR GST

Suppose Mr. A sells goods to Mr. B and charges sales tax; then Mr. B re-sells those goods to Mr. C after charging sales tax. While Mr. B was computing his sales tax liability, he also included the sales tax paid on previous purchase, which is how it becomes a tax on tax.

 

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This was the case with the sales tax few years ago. At that time, VAT was introduced whereby every next stage person gets credit of the tax paid at earlier stage. This means that when Mr. B pays tax of Rs. 11, he deducts Rs. 10 paid earlier.

Similar concept came in Excise Duty and Service Tax also, which is called Cenvat credit scheme. To a huge extent, the problem of cascading effect of taxes is resolved by these measures.However, there are still problems with the system that have not been solved till date.

 

GST will solve this problem. Let us see how.

 

  • Sale in one state, resale in the same state

In the example illustrated below, goods are moving from Mumbai to Pune. Since it is a sale within a state, CGST and SGST will be levied. The collection goes to the Central Government and the State Government as pointed out in the diagram. Then the goods are resold from Pune to Nagpur. This is again a sale within a state, so CGST and SGST will be levied. Sale price is increased so tax liability will also increase. In the case of resale, the credit of input CGST and input SGST (Rs. 8) is claimed as shown; and the remaining taxes go to the respective governments.

     

  •  Sale in one state, resale in another state

In this case, goods are moving from Indore to Bhopal. Since it is a sale within a state, CGST and SGST will be levied. The collection goes to the Central Government and the State Government as pointed out in the diagram. Later the goods are resold from Bhopal to Lucknow (outside the state). Therefore, IGST will be levied. Whole IGST goes to the central government.

 

  • Sale outside the state, resale in that state

In this case, goods are moving from Delhi to Jaipur. Since it is an interstate sale, IGST will be levied. The collection goes to the Central Government. Later the goods are resold from Jaipur to Jodhpur (within the state). Therefore, CGST and SGST will be levied.

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Powerful Ways to Grow Your Business

Running your own business is often hard work, specially till you manage to build momentum and getting things moving smooth.
If you’re ambitious for your business, you won’t want to hang about. So here are nine growth strategies to help you get the most from your time and effort as a business owner or as an entrepreneur.

Before you give in to frustration, here is some advice that can help you to grow your small business successfully.

1. Patience Is Necessary

You’ll need to be patient. Contrary to what you see and hear, there is no such thing as a business becoming an overnight sensation. If you want your business to have a fighting chance, you’ll need to have a great deal of patience.

2. Be Prepared to Work
As a small business owner, you’ll need to work like you’ve never worked before. Instead of people delegating work to you, you’ll be assigning it to everyone else. You’re the one who is in charge now. You are responsible for ensuring that every single aspect of your business is covered.

If this is your first time establishing your own business, you might want to hire a consultant. Also, pay close attention to how other successful small business owners in your area are managing their responsibilities.

3. Find Your Customer Base

No matter where you look, no business can survive without a good customer base. This is the digital age, meaning the majority of your customers are somewhere online. Look for them on social media websites such as Twitter, Facebook, and Instagram.

Don’t underestimate the power of social media. Create a strong brand presence, and work on establishing your authority and credibility.

4. Learn Your Audience

So you know where the customers are, and you are ready to go after them. Before you try to get their attention, make sure you have something beneficial to offer them. Find out what it is they want, and work with your marketing team so you can figure out effective ways to deliver that.

5. Be Mindful About What You Post

Anything that you post online and on social media should be tasteful, engaging, and positive. Don’t go crazy and post irrelevant or insubstantial stuff just to gain visibility. Establishing your business as a good and credible one takes time. When you post information that does not appeal to or relate to your intended audience in any kind of way, you hurt your progress and could lose some of your following.

6. Encourage Your Customers to Share
One way you can get your customers to boost your marketing efforts is to encourage them to share their experiences on social media. Make sure that the platform you use is set up so you can monitor what is posted. It is not possible for you to please all of your customers, so don’t be alarmed if you get bad reviews occasionally. Although you might not want negativity on your social media sites, you should not get in the habit of extreme censorship or you risk your organization’s credibility.

7. Network Everywhere

Everywhere you go is a perfect opportunity for you to network. Even if you are going to the grocery store, you are bound to come across someone who is interested in the products and services you offer. Or you might encounter someone in a position to offer you some useful advice.

Many local businesses have bulletin boards and community areas where business owners like yourself can leave flyers and business cards for people in the local community to find. This method is still an effective way to network, so make sure you take advantage of networking opportunities every chance you get.

8. Research Your Competitors

If you want to know how well your business is doing or if you are covering every aspect of marketing possible, take a look at what your competitors are doing. Watch their commercials and go online to see what deals they are offering.

Research what their customers are saying about them. While you are doing your research, you’ll be able to see what your competitors’ shortcomings are. You’ll also be able to determine what services and products their customer base wants so you can tailor your offerings accordingly.

9. Pay Attention to the Trends

Entrepreneur David Kiger notes the importance of business owners staying focused on trends in their industries. These trends can give entrepreneurs direction and also keep them from using up valuable resources. Think of trends as guidelines for you to follow while you work on growing your business so you can better meet the needs and demands of your customers.

Don’t let inexperience or a lack of time keep you from achieving success with your business. You just have to work harder and longer until you see your dreams becoming more of a reality. Work on improving your strategies and sticking with them long enough to see what works and was doesn’t. Then you can make adjustments as needed to improve your chances for success.