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RBI The RBI (Reserve Bank of India) is the apex financial institution of the country’s financial system entrusted with the task of control, supervision, promotion, development, and planning. RBI is the queen bee of the Indian financial system which influences the commercial banks’ management in more than one way. The RBI influences the management of commercial banks through its various policies, directions, and regulations. Its role in bank management is quite unique. In fact, the RBI performs the four basic functions of management, viz., planning, organizing, directing and controlling in laying a strong foundation for the functioning of commercial banks.  In 1921, the Imperial Bank of India was established to perform as the central bank of India by the British Government. But unfortunately, Imperial Bank failed to show its performance up to the mark and didn’t achieve any success as the Central Bank. Then the Government asked the Hilton Young Commission in 1925 to view on this subject. The commission submitted their reports saying that one single organization can’t be able to act as two separate agencies (both credit and currency control). So, it’s required to set up a brand new central bank. In 1st April 1935, Reserve Bank of India...

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Small Scale Industries Small scale industries (SSI) are those industries in which manufacturing, providing services, productions are done on a small scale or micro scale. For example, these are the ideas of Small scale industries: Napkins, tissues, chocolates, toothpick, water bottles, small toys, papers, pens. Small scale industries play an important role in social and economic development of India. These industries do a one-time investment in machinery, plants, and industries which could be on an ownership basis, hire purchase or lease basis. But it does not exceed Rs. 1 Crore. Let us discuss in detail about it. Essentially small scale industries comprise of small enterprises who manufacture goods or services with the help of relatively smaller machines and a few workers and employees. Basically, the enterprise must fall under the guidelines set by the Government of India. At the time being such limits are as follows, For Manufacturing Units for Goods: Investment in plant and machinery must be between 25 lakhs and five crores. For Service Providers: Investment in machinery must be between 10 lakhs and two crores. In developing countries like India, these small scale industries are the lifeline of the economy. These are generally labour-intensive industries, so they create much employment. They also help with per capita income and resource utilization in the economy. They are a...

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Ever since GST or Goods and Services Tax regime was announced, there has been a wide speculation about the GST rates bracket. The GST Council is the body that decides the rate slabs and the GST Council has been periodically revising the list of goods and services for each rate slab. It’s clear that the Government’s intentions are to have lower tax rate for goods and services which are essential needs and higher tax rates for goods and services that are considered as luxury supplies. Various GST Tax Slabs in India 2020 In India, there are 4 types of GST rates: GST Tax Slab of 5% Under this slab, the goods of basic amenities are covered such as sugar, oil, spices, coffee, coal, fertilizers, tea, ayurvedic medicines, agarbatti, sliced dry mango, cashew nuts, sweets, handmade carpets, lifeboats, fish fillet, unbranded namkeen, and life-saving drugs are covered. The services under this slab include railways, airways, takeaway food, AC and Non-AC restaurants, hotel rooms with a tariff less than Rs. 7,500, and special flights for pilgrims. GST Tax Slab of 12% Under this slab, products like cell phones, sewing machine, umbrella, jewelry box, along with processed foods like frozen meat, fruit juices,...

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What is Income Tax Refund? When a taxpayer pays excess tax i.e., the amount of taxes paid exceeds his/her actual tax liability for a particular FY, then the Income Tax Department returns the ‘excess tax’ paid in the form of Income Tax refund. For example: A salaried individual could not declare the details of his tax-saving investments on time to his employer. As a result, his organization deducted extra taxes via the TDS mechanism. In this case, the employee can claim an income tax refund equivalent to the amount of excess tax deducted.  Below are some more cases wherein you can claim refund: The amount of tax deducted at source (TDS) on your salary, interest from bank deposits, interest on bonds, etc. exceeds your actual tax liability for the applicable FY. Advance tax paid on self-assessment is more than the tax liability as per regular assessment. Double taxation of income. If you have paid higher tax to the government in the previous financial year i.e. FY 2018-19, then you are required to file your income tax return (ITR) to claim the refund amount. Higher tax is usually paid when during the financial year the advance tax paid by an individual,...

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What is GST? GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. In simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply of goods and services. This law has replaced many indirect tax laws that previously existed in India. GST is one indirect tax for the entire country. Five Basic Points about GST  When is GST levied? The most important thing about GST then is its point of levy. Under GST, point of tax levy is ‘supply’. What constitutes a supply has been defined in the GST Act. Supply means sale of goods and services. A supply of goods and services can take place even without an actual sale. Supply will also include, transfer, exchange, and barter, rental, lease and also a supply made to an agent or to a branch. So if you are a business, engaged in any of the above, GST will replace all taxes paid by you on purchases, and mandate you to levy GST...

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"Know Your Customer" or KYC is an important term used by businesses and refers to the process of verification of the identity of the customers and clients either before or during the start of doing business with them. Banks, digital payment companies or any kind of financial institutions are now required by the RBI norms to have their customers KYC process completed before allowing them complete access to all services. KYC is done as a precaution against illegal activities like money laundering, bribery or corruption. It helps the government and businesses keep track of such activities or suspect them beforehand. Apart from being a legal requirement, completing the procedure will also help you gain access to many of the financial company's premium products and get transactions done faster. The Government of India has notified six documents as 'Officially Valid Documents (OVDs) for the purpose of producing proof of identity. Even when you already submit the KYC documents once, the banks can ask again as they are required to periodically update KYC records. This is a part of their ongoing due diligence on bank accounts. The periodicity of such updation would vary from account to account or categories of accounts depending...

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Earlier different accounts were required for the accounting of different taxes such as VAT, CST, CENVAT, Excise duty, Various Countervailing duties etc. However, under the New GST regime, the different taxes have been subsumed in GST. So the number of accounts required to be created has reduced drastically. Now the business has to maintain the Accounts under three major heads that are: CGST, SGST and IGST A separate account is required under each head for differentiating the tax paid on inputs and tax received on output. Such a treatment enables the business to ascertain the amount of Input GST and Output GST separately. The separate treatment will enable the business to determine easily the amount of tax liability. He is required to pay under GST and the amount that is available for him to take credit. Accounting Treatment Under GST The Goods and Services Tax (GST) has simplified the indirect system in India with the “one nation, one tax” approach. It has also simplified the business and accounting processes which ensure more transparency in business reporting and compliance. In the GST regime, a taxpayer is required to maintain all types of accounts and records related to GST transactions such as Input Supplies (Purchase), Output Supplies (Sale),...

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In the GST regime, for any intra-state supply, taxes to be paid are the Central GST (CGST, going into the account of the Central Government) and the State GST (SGST, going into the account of the concerned State Government).  For any inter-state supply, tax to be paid is Integrated GST (IGST) which will have components of both CGST and SGST.  In addition, certain categories of registered persons will be required to pay to the government account Tax Deducted at Source (TDS) and Tax Collected at Source (TCS).  In addition, wherever applicable, Interest, Penalty, Fees and any other payment will also be required to be made. In general the supplier of goods or service is liable to pay GST.  However in specified cases like imports and other notified supplies, the liability may be cast on the recipient under the reverse charge mechanism.  Further, in some cases, the liability to pa is o the third person (say in the case of e-commerce operator responsible for TCS or Government Department responsible for TDS). At the time of supply Goods as explained in Section 12 and at the time of supply of services as explained in Section 13.  The time is generally the earliest of one...

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Meaning of GST GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. In simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply of goods and services. This law has replaced many indirect tax laws that previously existed in India. GST is one indirect tax for the entire country. Under the GST regime, the tax is levied at every point of sale. In the case of intra-state sales, Central GST and State GST are charged. Inter-state sales are chargeable to Integrated GST. Now let us try to understand the definition of Goods and Service Tax – “GST is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.” GST is a tax on goods and services under which every person is liable to pay tax on his output and is entitled to get input tax credit (ITC) on the tax paid on its inputs(therefore a tax on value addition only) and ultimately the final consumer shall bear the tax”. Objectives of GST Goods and Service Tax...

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With GST around the corner, it is extremely critical for businesses to start invoicing under GST mode, and not face any roadblocks, as they usher in the new age. Businesses will need to ensure that the GST transaction invoices are passed with the requisite details, which will later enable them to claim the right ITC, and remain GST compliant while growing continuously Invoicing Under GST (Supply of Goods and Services) When a registered taxable person supplies taxable goods or services, a GST invoice is issued. To issue and receive a GST compliant invoice is a prerequisite to claim ITC. If a taxpayer does not issue such an invoice to his customer - who is a registered taxable person, his customer loses the ITC claim and the taxpayer loses its customers. First and foremost, Invoicing forms a crucial function when it comes to the execution of a transaction.In the final analysis,the invoice becomes a basic document for recording the sale/purchase in books of accounts. Equally important ,the government has notified rules of invoicing under GST along with a template of invoice(GST INV-01) covering the elements such as supplier’s details, GST tax rates etc that need to be presented. Details to be captured in the GST Invoice Format Invoice...

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GST registration applies to all individuals and entities supplying goods or services in India. GST registration becomes mandatory when the aggregate value of supply exceeds Rs.20 lakh. The Ministry of Finance (MoF) simplified the GST registration procedure to ease the tax filing process. If the entity operates in a special category state, GST registration becomes applicable if the value exceeds Rs.10 lakh p.a. In this article, let us look at the eligibility for obtaining GST registration. The article also coves documents required as well as the GST registration procedure online. Requirement for Registration A business entity that is currently registered under any of the existing tax regimes including:- Central Excise duty Service Tax State VAT Central Sales Tax But if a business doesn’t have any existing registration, then it needs to get registered if aggregate turnover in any financial year exceeds the threshold limit (Rs. 20 lakhs). Every person who makes a supply from the territorial waters of India. Explanation: GST Registration will be a single PAN-based registration in one State or Union territory, but a person having multiple business verticals in one state or businesses in multiple states has to get a separate registration for each such business. This process is however mandatory for certain people that are listed below: Persons making any Inter-State taxable supply (e.g. from...

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Goods and Services Tax (GST) is considered the biggest reforms in India. However, one thing that has become the talking point is – the mechanism of input credit under GST. In simple words, Input Credit means at the time of paying tax on sales, you can reduce the tax you have already paid on purchases. In this article, we’ll cover all you need to know about Input Tax Credit (ITC) under GST, the time limit to avail ITC, how to calculate Input Tax Credit, how to claim ITC, the situation where you can not avail ITC and much more. What is Input Tax Credit? Input Tax Credit means reducing the taxes paid on inputs from taxes to be paid on output. When any supply of services or goods is supplied to a taxable person, the GST charged is known as Input Tax. The concept is not entirely new as it already existed under the pre-GST indirect taxes regime (service tax, VAT and excise duty). Now its scope has been widened under GST. Earlier, it was not possible to claim input tax credit for Central Sales Tax, Entry Tax, Luxury Tax and other taxes. In addition, manufacturers and service providers could not claim the...

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