GST Compliance rating is one the most needed initiative taken by Government under GST. Compliance rating is a score card for tax payers under GST. It will provoke tax payers to comply with GST rules and regulations in order to be on good rating scale. It can be termed as a performance indicator for business owners, tax payers etc.
How GST compliance rating works?
As it’s a performance rating businesses so rating would be based on some parameters. The basic parameters would be:
Cloud accounting is widely accepted by small businesses. Cloud Accounting is termed as online accounting and manual accounting called as traditional accounting. Why we need cloud accounting? The best answer would be to save time, money and to reduce accounting errors. Also, cloud accounting is the best way to do accounting as you can save & edit all your data at any time and anywhere as data will be saved on server. These are some features which attract small businesses to use accounting software.
On 23rd meeting of GST council Finance minister Arun Jaitley announced some major changes in tax rates which provide some relief to tax payers.
GST council also reduced GST tax rates for service sector (Restaurant, Handicraft & Aviation) to simplify taxation process and promote ease of doing business.
Relaxation for Service Providers:
Service providers within Rs.20 Lakh turnover are free from GST registration. This is also applicable on those who provide inter-state services and through any e-commerce portal.
There is no good news from this 23rd meeting for restaurants. Restaurants can’t avail any input tax credit with remaining tax rate of 5%.
GST marked as the biggest tax reforms in India since 1947. It’s a unified tax implemented by current BJP Government with an aim to erase all state or central government indirect taxes. GST subsumes 11 Indirect taxes that were levied on the sale of goods and services by central or state Government. GST made indirect taxation process simpler for small and medium scale enterprises. It will also boost economic growth in a long run. New small businesses will be benefited from this new tax law as they have to pay less tax under composition scheme (SMEs with Rs.20 – Rs.50Lakh turnover).
As we are saying that GST made taxation easier. So, let’s have a look at its registration process. In this article we will cover all details regarding GST registration with below-mentioned points:
Accrued liabilities usually referred to those transactions which are incurred by an entity but yet not have been paid or receive an invoice.
There are two types of accrued liabilities i.e. short-term accrued liability and long-term accrued liability. Short term accrued liabilities are daily basis transactions which happen on a regular basis. Long-term accrued liabilities which happen very rarely but for a longer period of time.
Examples: Accrued wages, accrued pension liability, accrued interest on loan payable etc.
Financial accounting is the process of preparing financial reports for both internal and external use of a business. Financial report includes balance sheet, cash flow & income & expense, equity & liability statement.
This kind of report needs at the time of tax filing, company valuation etc.
Trial balance is a way of bookkeeping to ensure all ledger inputs are correct. In trail balance all credit balances entry under credit balance head and debit inputs under ledger balance head. If credit and debit balance found to be identical then we could conclude that there is no error in accounting entries.
Trail balance prepared in a regular period to minimise accounting error. In companies point of view, it’s an important task needs to do regularly. It would help to prepare company’s financial statements with zero error.
Factory overhead is also named as manufacturing overhead. Factory overhead cost is the total operational cost used for production or manufacturing in a factory. It’s not the direct cost associated with raw material and labor. Its also called an indirect cost.
Factory overhead includes in manufacturing cost category.
Bank reconciliation is a process of comparing company’s own financial record with bank record to maintain the accurate figure.
Bank reconciliation is very necessary as it helps to avoid any overdraft payments, duplicate charges etc. Double entry bookkeeping is one way to perform reconciliation. Bank reconciliation needs to be prepared for every month. Bank reconciliation is a way of finding errors in bank account and company’s ledger account.
Endowment fund is always held by a non-profit organization as invested capital in this fund need to use for only non-profit works. In endowment fund the principal amount must be retained and earnings from this fund only can use for operational works.
This fund integrated with non-profit organizations like collage, universities, NGO, hospitals, church etc.
It’s the period for which financial statements prepared of an entity. One accounting period consists of 12 months. This time period can be from January to December (calendar year) or April to March (Fiscal Year).
Accounting period varies according to type of business. For example, if a business set forth on February 12 then its first accounting period would be from February 12 to February 28/ 29.
Again, if a business shut down on March 25 then its final accounting period would be from March 1 to March 25. Accounting period pertain to only income and cash flow statements as balance sheet prepared on a specific date.
Dividend is the share of profits of a company / entity with shareholders. After paying to its creditors company can share some or whole profit with its shareholders. Company can also skip paying dividends if it needs funds for reinvestment or any other business work. Company also can decide the date and rate for dividend pay. Normally, dividend paid quarterly and monthly.
There are two types of account in accounting system, one is balance sheet account which carries remain balance to the next year and another one is profit & loss account which becomes zero at the end of each & every year.
Balance Sheet Account: Balance sheet account includes three ledger accounts i.e. asset, liability, capital/Equity.
Bill of supply is a type of invoice generated at the time of selling exempted goods or services exempted under GST by the seller. Businesses who registered under composition scheme can’t charge any tax sell by them, whereas a non-composite dealer also can’t charge any tax on exempted goods and services.
It occurs when a deposit amount in an account is lower than the withdraw amount in the form of a cheque. It’s a negative remark for the respective account also bank will charge for overdraft. The account balance goes below zero if overdraft happens.
This negative remark will affect the credit score of the respective bank account.
It’s the total cost of depreciation of an asset in a regular period of time till it exists. It shows the decreasing value of an asset over the period of time. Accumulated depreciation reflects in the balance sheet under accumulated account and this amount never ends at the end of a financial year, it carry forward to the next year.
We can calculate the depreciation amount in three different ways mentioned below:
Shareholder’s equity is an asset for shareholders. It total amount left after deducting total liabilities from total asset. It reflects the net worth of a company. Shareholders’ equity= Total Asset – Total liabilities
Annuity is an amount of fund invested by an individual or a financial institution in order to receive equal amount of money at equal time intervals. It can be defined as a fixed income source for an individual.