GST is a destination-based
taxation system, levied on the consumption of goods and services. It is levied
at multiple stages of production as well as distribution, placing it as a
comprehensive indirect tax depending on pure value addition at every stage.
GST is calculated based on
the net price of a product. The applicable tax slab for a particular product or
service is determined based on certain regulations issued by the Government of
India.
- A total of Rs.412,000+ crore was collected as Goods and
Services Tax during the financial year 2019-2020 (January to October.)
Although not intrinsically
related, term loans play a major role in the Indian economy just as GST. These
are advances provided by the government or by public or private sector
financial institutions to entities, individuals or companies, based on
agreements mandating a term of repayment.
For a business, GST and
term loans are significant contributors and regulators of its overall
operations. It is vital for business owners to plan their finances accurately
by computing their tax liabilities as well as those related to their finances.
You can use a GST or term loan calculator offered
for complimentary usage by numerous leading financiers and others to do the
same. But before that, it is vital to have a proper idea about either for
comprehensive and beneficial usage.
Understanding online tax calculators
GST is calculated by
multiplying the taxable sum by the applicable tax rate. It determines the total
tax liability, where one half of the applicable tax rate will be charged by the
central government and the other by the respective state government (or Union
Territory.)
Online GST calculators
determine the tax liability by calculating the taxable income, income exempted
from GST, and applicable tax slab.
- If a taxpayer pays for a product or a service that already
includes GST charges in the total cost, the tax liability will be exempted as
GST excluded amount. It is calculated as – GST excluded amount = GST including
amount / (1+GST rate/100).
Different GST tax slabs
The tax liability under
Goods and Services Tax varies depending on the product or service on offer. It
is important for everyone to understand the different tax slab before using a
GST calculator for wholesalers and retailers.
GST tax bracket ranges
from 0% to 28% depending on whether a particular product (or service) is
considered as necessity or luxury. Luxury items usually attract a higher tax
liability, whereas essential and commonly used items are taxed less.
Here is a breakdown of different tax slabs –
- GST of 5% is applicable to household goods, including cooking oil, spices, tea and coffee, and sweets. Lifesaving drugs and coal is also covered under this particular slab.
- Computers and its peripherals, processed foods, etc. are included under a tax slab of 12% under the GST regime.
- GST of 18% is applicable to toiletries (hair oil, toothpaste, soap, etc.), capital goods and industrial intermediaries.
- Any luxury item, including consumer durables, passenger and premium cars, motorcycles, cigarettes, and aerated drinks, etc. are applicable on a GST tax slab of 28%.
Note that CESS is
applicable to a handful of certain types of goods, such as tobacco, chewing
tobacco, etc.
The revised GST rate had a
significant impact on small and medium scale businesses; by combining several
indirect taxes into one umbrella, businesses have access to a transparent
system that eliminates repeat taxation, variable tax slab for inter-state
transportation and retailing of goods, etc.
GST calculation for reverse charge
The calculation for a
reverse charge under the GST regime follows a similar formula. GST applicable
for the reverse rate is also determined based on the applicable tax slab. The
CGST and SGST division will be half of the taxable amount.
It is an important aspect
of GST that every SME or MSME should know to ensure they fulfill their tax
obligations in time.
GST’s effect on the lending industry
Financial and lending
sectors were not significantly affected by the implementation of GST. The
service tax levied on credits has been standardized at a flat 18%; there was no
other significant change that marked the enactment of GST in the financial
sector.
Prospective borrowers can
easily finance their expenses without worrying about any additional cost under
the new taxation system. One can use a term loan calculator to determine their
financial requirement, payable interest rate, preferred loan tenor, etc. before
availing a particular credit.
What is a term loan EMI calculator?
A term loan calculator is
an online tool that allows borrowers to determine the total payable amount
against their credit. Prospective borrowers only have to enter the loan amount,
select applicable loan tenor and rate of interest, and the calculator will
display the results as EMIs.
Such online calculators
are ideal for comparing amongst various term loans, including unsecured credits
like business loans. Customers can find the best balance between payable EMIs
and the total cost of the credit to select their lender accordingly.
There are various financial
institutions, including NBFCs like Bajaj Finserv, that offer such credits to
eligible applicants. Moreover, this NBFC also provides pre-approved offers to
existing customers, which makes the application process quick and hassle-free.
The
understanding term loan and GST calculators are essential
for companies across the nation, as it allows the business to comply and
benefit from the updated regulation.
These online tools offer significant convenience to taxpayers, helping
them determine their tax liability accurately without spending substantial
time.
