Introduced in 2017, the Goods and Services Tax, better known as GST is said to be the most elaborate tax system introduced by the Government of India. This unified taxation system has affected everyone, including businesses of all shapes and sizes. GST has been in India for over five years now. Let us take a look at its impacts on a business and working capital loan.
The remarkable growth in the Indian economy has helped give new opportunities to numerous businesses. All businesses, no matter how big or how small, need working capital to help their business run smoothly. Working capital term loans make it easier for entrepreneurs to finance their operations. The regularly launched government loan schemes have also proved to be very helpful, especially for micro, small and medium businesses.
GST and Working Capital Loans
The introduction of GST brought a major change in the way inventories are managed in a business. To avoid cross-border taxation and expenses, companies often maintained warehouses in different states. The upkeep of warehouses and compliance with multiple taxation systems was indeed a difficult job. With GST you only need to maintain a lesser number of warehouses if you wish to maintain the business supply in those states. Thus, saving your working capital.
For your working capital needs, you will come across a plethora of options. Working capital loans, also called business loans, are great ways to keep your company stay afloat. Online business loans have not only made things quicker but also very simple and convenient. Let us take a look at how your GST returns help you get a GST business loan and help you raise funds.
Optimizing Financial Management for Growth
A GST business loan is an unsecured financing option. It enables business owners with registered GST numbers or GSTIN to access funds for working capital needs. In most cases, your GST returns will help you get a business loan.
The micro, small, and medium enterprises are eligible to seek loans of up to ₹1 crore, leveraging their GST filings. In some cases, the business loan can be as high as ₹3 crores. The rate of interest on such loans is decided based on the GST returns, the loan amount, whether the loan is secured or unsecured, the repayment tenure, and other financial details of the company.
When businesses export goods outside India under the GST (Goods and Services Tax) system, they can get back 90% of the tax they paid on the materials used to make those goods. You need to keep in mind that you need to do so within 7 working days. This refund can lower your costs and increase your profits, simplifying your financial management. Additionally, keep in mind that you can’t receive a refund for taxes paid on other business expenses such as rent or utilities.
Let us take a quick look at the key benefits of taking a GST business loan:
- Collateral free loans
- Minimal paperwork, without the need for a financial analysis
- Flexible repayment tenure options
- Straightforward assessment criteria
- Eligibility is determined based on GST returns and statistical score
- Digital procedures.
Conclusion
GST, in many ways, is still a new concept. As the country gets more and more used to it, it may take some time and effort on your part to make the most of it. Simple and easy to get, a GST business loan can help you deal with a financial crunch that you are expecting or undergoing.
