GST is an indirect tax that is levied on goods and services. Business loans have become expensive after the implementation of GST. This is because the GST is levied at the rate of 18%. Thus, the processing fees of these loans make it expensive for borrowers.
Some key GST changes that affect your business:
- According to the taxation system, any tax paid on a business expense that is not directly related to taxable sales will not be available as credit
- Businesses need to pay tax on advance receipt dates and this becomes a problem as it cannot be claimed under input tax credit immediately. Input tax credit means reducing tax paid on inputs from taxes to be paid on outputs
- Under the GST regime, stock transfers are included under the category of goods or services and are taxable. This will impact the company's cash flow because the tax is to be paid on the date of stock transfer, whereas input tax credit can be availed on the date of stock liquidation