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GST: Good for Taxpayers, Bad For Government?
GST Rises
Many might be unaware, but the idea of implementing GST in India was introduced under the leadership of the Late Shri Atal Bihari Vajpayee. He appointed an Empowered Committee(EC) in the year 2000, and the committee was tasked with drafting the GST laws. Their and several other's efforts combined finally came to fruition in the year 2017 with the adoption of the Good and Services Tax(GST) Act, 2017. Following the 1st of July, 2017, GST has been in full operation and it seems to have restored order to the taxation system in India.
GST is basically an indirect tax replacing most of the indirect taxes that are levied in various stages of production of goods and services. In this way, GST becomes an indirect tax for the whole country. GST basically aims at removing the cascading effect of taxes. Cascading effect is basically the additions and accumulation of taxes at each level of production of a good/service.
The system of GST return and compliances were a bit baffling and confusing to the taxpayers at first. This statement comes not from the writer's perspective but straight from the mouth of the Principal Cheif Minister of Central Taxes Mr. AK Jyotishi. He says " We do accept the fact that GST initially had several glitches and had created complexity in complying with it ". Now, the government claims to have straightened out the flaws and glitches with the statement from Jyotishi adding "a sizable chunk of the hitches stands removed".
GST Revenue and Surrounding issues
The government has gone as far as to say that there has been a voluntary compliance and great response to GST after it's initial stages leading to a rise in the tax base from 60 lakh Crores to 1.10 crore Crore rupees. This sounds great for the government but only on paper. The tax base increase can be accredited to the inclusion of many sectors in GST who were previously excluded.GST integration and application has surely helped taxpayers with filing their taxes and smoother compliances.
Present numbers, however, paint a picture of grim reality and realization for the government. The government had offered to provide compensation for 5 years because of the losses incurred by state government due to the implementation of GST, a good move by the central Government helping state governments consolidate the law till the grass root levels.
However, recent realizations and evaluations have left the Central government dissatisfied with the low revenue figures of the GST regime. The bi-monthly compensation for the months of June and July 2018, rose to as much as 3.8 times of that for the months of March and April 2018. the central government is also constantly falling short of their set target of 1lakh crore. The government, however, present a strong front and claim that they have eliminated implementation errors and are also "better equipped to deal with defaulters" which sounds like a hollow statement considering current events. In this regard, the Central Government is formulating strategies and hoping state governments will help identify flaws within the current system.
THE STEPS OF RECOVERY
The PTI(Press Trust of India) also was told by a high-ranking official that the government needs to devise a strategy to shore up the GST revenue. The source also bemoans at a lack of a set pattern for paying the compensation to individual states.
The government, however, isn't just sitting quietly and watch as they fail to gather appropriate revenue. GST is set to undergo radical changes in the coming times.
Here are some of the reforms government are planning:
· Deploying anti-invasion measures with a focus on top 30 taxpayers. Data Analytics will be used to profile top 30 taxpayers and look at their tax payments before and after the implementation of GST
· Assuring businesses of all kinds that they would try to put a curb on being intrusive with businesses
· Reforming the current 5 slabs of GST to cut down slabs to just two.
Conclusion
Thus, in conclusion, the GST Act has been a welcome change to the taxation regulations in India. However, even after getting past the confusion and challenges of implementation, the government is yet to get a firm grip on the tax-structure of GST and like any other radical change, GST has to be steered to success with gentle care.
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Six major problems that an entrepreneur can face at the time of food business startups
Have you started you a new food business but unable to run it for long? Are you wondering why it foils down when you have never left any recoupment of money invested? So here is your answer, Anyone can start a food and beverage business but there are very few who did not end up with fail. This article will help you to know what are the points that should be kept in mind while establishing a food and beverage business so that it will not make you disappoint and take you to the zenith of success.
Following are the mistakes that should be avoided :
• Limited Access to Market Insights: Although it is not that crucial to access in market insights during the strategy-building process because this information is very costly. But the brand owner gives the privilege to learn the importance of market research far especially when the retailers start cutting down the category and denying their recently produced products. Besides, brand owner can obtain Trademark registration to enhance its brand in the market and make it a strong identity. Understanding the consumer and shopper trends could be beneficial for your fortune.
• Essential Brand and Design Mistakes: Around 10% of the new product developments gives priority to pay a bit more to recruit professional packaging design experts. The well-done packaging design can add great value to your business which you should never underestimate. 99% of the customers at a first time buy your product to attract towards the visual impression. It is the key to the presentation. There are so many companies who can invest its money in the development of a new product but hardly spent hundreds in hiring a designer. Resulting in bad response.
• The Product Development Process: The entrepreneurs of food and beverage often avoid to evaluate the risks they have taken while trying to create the product in their kitchen. The food must meet the FSSAI Standards. So, it will be beneficial, you can obtain FSSAI Food License. Scalability should be maintained. There are various ingredients having different prices and certificates. In the case of drinks development, you will definitely deal with the problems that may bring the product down quickly if they are being untreated or if the product is developed without getting any help of an experienced food professionals.
• Underfunding and Business Model Failures: It is necessary for a successful food and beverage business running to have a proper and healthy business model. It also requires enough capital to execute it. Most of the startups are usually have one or two men armies with lots of ambition but only 24 hours in a day and no cash to afford any additional help. Seldom it works but it often burns out the owners, ruins the passion and leaves many bugs in the system. They have very little information on managing a drinks business and very few entrepreneurs can deal with it.
• The Route to the Market: Of course, there are so many brands competing with each other for a limited shelf and fridge space in the consumers home but still most of the retailers do not care about it. They do not give priority to the brands that have not yet demonstrated. They are much ahead for replacing it and bring another product that is relatively doing well. Even if any new brand somehow gets a deal with one of the major retail accounts then it tends to disappear from the selves within a half year as it fails to deliver on its promises and expectations.
• The Bottom Line: Most of the beverage startusps focus on including the whole periodic table to their functional drinks. Hence spend a lot of time and money on the product development system which results to fail very soon. Rest entrepreneurs focus on the drink only thinking that it will sell itself without any external push. There have been always a balance between a healthy business practice model, marketing, product, brand, communication, and promotion for the successful brands. Many businessmen of food have only one aspect i.e. balance between the above things.
This article has been contributed by Sarubpreet Kaur who is a content writer with LegalRaasta. Legal Raasta is an online portal that assists companies and startups with company registration, GST registration, Food License, Trademark registration.
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MANAGE YOUR CASH FLOW FOR YOUR STARTUP
“Before you can run, you need to walk” - crawl even.
These 10 tips on managing cash flow will bring you back down to earth - so your business can fly.
Whether one is working for a startup, or he is startup himself, most of the businesses fail because of lack of cash. It has been seen numerous times that the startups try to distend their businesses. And since they do not track their cash flows, they realize one day that their long-term runway has reduced to a limited now. If all the startups start keeping an eye on the movement of cash and their spendings, they can save their business from failure.
The one who takes the risk of running a business without the analysis of cash flow might land in the raises of trouble. If you are doing so, you are actually shooting yourself in the foot and wasting all that you have done to maintain your other great works in management, finance, HR, etc.
Here we have described 10 important tips to keep your business on the path of growth.
#1. Control your spending’s
All businesses are meant for profit making and earn the name of a successful economic entity. But running does not always work, sometimes you have to walk or even crawl. At the time of setting up a business, if you are working on raising up the funds, you need to first have a check at your cash flow and spending’s.
You can maintain your cash flow by creating a spreadsheet if you want. But the better option is to look after a cash management or accounting software, it will ease your work and will remove your accounting stress. You can opt for any good software which gives you automation, security from cyber threat and also provide protection from any human error.
#2. Hard Time Reserves Are Always a Good Idea
No one can predict a business future. The nature of a business is unpredictable and we remain like this always. A backup plan is the most recommended idea for such circumstances. For instance, a solid backup reserve of cash will protect you from any unforeseen circumstances. Emergency pivoting will make your times less hectic and will support you anytime. If you have reserved, you will always remain stress- free and focused on the growth of your business.
#3. Get Help for Managing Money
So, this is the problem arising with almost all the startups that are nor performing efficiently. It is seen most of the times that the founder is managing the accounts of the company, and it is eating up most of his time. Most of this type of people think that they are very efficient than they actually are. Honestly, if you are spending 80% of your precious time in managing money, you have only 20% of your time left for the growth of your business. This is not at all a good deal.
The best thing is to hire a CFO or an accounting company for this purpose. It does not matter how much efficient you are, if you are managing your accounts by self, you are just wasting a big portion of hour precious time which you would have spent on the growth of your business.
One can also control the cash by introducing technology from account reconciliation to cross-currency purchase resistance and supply management. Having any of this essential solution will save your precious time. While on one hand, you will be focusing on your growth, on the other hand, you will be analyzing your money management too.
#4. Identify your spend priorities well
You should be able to identify your spends well. Knowing what is important vs. what is nice to have can create a big difference between success and failure. Opting for luxuries like tabs and free yoga classes for the employees and a dashing premises will suit a business till the time they are profitable.
Minimizing all these extra spends on the luxuries and premises and will ensure your money growth and not drowing down.
#5. Get all your owed money as soon as possible
It is possible to get trapped by letting the customer’s move away paying late in the beginning. As a startup company, one might be very happy to have customers and so eager to please that we ended up grubstaking them for months. It is not at all a good thing until and unless you are a bank.
Maintain your invoices regularly and shift to an automated system as soon as possible. Again Tip 3 will help you here, hire someone to have a regular eye on your accounts.
#6. Pricing Discounts
Another option is to offer pricing discounts on early payments. Yes, you read it right! This system can affect your profit margins but it will surely improve your cash flow management. This can be done by offering cash discounts or incentives to the customers on early payments than what your regular payment cycle asks for. Even you also can ask for discounts on early payments from your suppliers. But also make yourself sure that you do not suffer a cash flow shortfall.
#7. Don’t try to get more than what you can manage
Cash flow management is all about efficiency and good timing. No startup can resist themselves from having a new big fat client. It is a revolutionary talent to say yes on the spot to a big client and skip thinking of what to do later but it can push you into a serious trouble.
If you are going to deal with a project that is costing very high, turn down and postpone it for later. This will let you a good time for research and think once again. Try to offer discounts for delaying the projects or extending the deadline of the project.
#8. Cash Flow vs. Profits
You cannot grip your cash flow just by looking at your profit and loss (P&L). There are some other factors too that affect your cash flow- accounts receivable, payable, inventory, capital expenditure, Debt services, etc.
Today's dynamic businessmen have found a secret. Knowing what you have earned and knowing what the status of your cash is, both are the different sides of a coin. As defined by the rules of accounting, profit is simply the expenses subtracted from revenue. Invoicing a customer for the goods or services you sold to them generates revenue. While the actual collection of money on that invoice is what generates cash.
Profits are generated by having a positive cash flow. You require enough cash to pay your suppliers and employees in order to keep the business operations running. It is only the sale of your goods or services which helps you in generating profits. You need to structure your startup well if you want to have a positive cash flow and if you want your company to grow.
#9. Hire Smart
Now, recruitment and hiring are always proved as a fine line for a startup. On one hand you don't want to let you go crazy in the starting but on the other hand, you also don't want to become that much steady that allow you to make things wrong. Hiring highly skilled and experienced employees will save your money and time whereas hiring the lower and mediocre ones will cost you.
A study by the University of California-Berkeley Institute for Research on Labor and Employment tells that it costs an average 3300€ to hire an employee. Don’t waste that much money on the wrong person.
#10. Get Tech In
Preparing your cash flow using spreadsheets can help in the short term but it is not at all a safe way to secure your financial data. You need to secure your financial data first from any theft or loss. Particularly at this time when the cybercrime is rising at the peak.
Technology will not only give access to your data anywhere, anytime, it will also give you the surety of protection from any crime of theft. This becomes more important when you are going to start a second/third office in a different country and having to manage multi-currency payment system. We have seen this a number of time again – different ways of dealing with cash flow in different places, without having a unified layer of intelligence or protection on top for safety.
“This article has been contributed by Sarubpreet Kaur who is a content writer with LegalRaasta. Legal Raasta is an online portal that assists companies and startups with company registration, GST registration, Food License, Trademark registration.”
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Zomato, Swiggy and others to de-list restaurants without FSSAI license
The thrill of online ordering.
Let's be honest "your food is on its way" is one of the happiest notification that a food business can send to their customers. Generating revenue with the help of the internet and online orders, great reviews leading to the increased outreach of restaurants has made for a blissful time for food-based businesses. Swiggy, Zomato, UberEats, Foodpanda are all a means to end providing best quality cuisine to your customers in remote locations.
However, it would be a shame if a restaurant would lose valuable customers because of unsafe standards of food. FSSAI(Food Safety and Standards Authority of India) has instructed the major food delivery services to delist restaurants not having FSSAI license. This directive was issued in July of 2018.
Sub-standard Food
The issue of the food safety arose because of the spike in the frequency of complaints from customers of these food delivery apps bemoaning sub-standard and potentially health-endangering food. Unsafe ingredients, unhygienic preparation environment, improper handling of food items are all things a food restaurant should be vary of or else it could lead to FSSAI license being rejected and ultimately losing a huge client base from apps like Zomato, Swiggy, UberEats and, Foodpanda.
Swift Action being taken to ensure food safety
In the quest for providing a comprehensive list of available food outlets to customers, these food delivery apps sign up most of the restaurants on their respective platforms without checking for appropriate FSSAI licenses. However, this methodology is undergoing a massive change with the directive from FSSAI.
Zomato, one of the top food delivery apps in India has taken proactive measures and already delisted dozens of restaurants from its platforms. CEO of Zomato, Deepinder Goyal assures that these restaurants will be back to order online from once they have their FSSAI licenses. Zomato has also taken measures to help their highest-valued restaurants with inappropriate FSSAI registration by requesting a deadline extension. The previous deadline was set at the 31st of July but has now be moved down to end-September.
Swiggy was not far behind, with the food delivery app de-listing many unregistered restaurants from their platform as well. Swiggy however, was also extremely helpful towards restaurants when they set up FSSAI assist programs to help these institutions acquire their FSSAI licensing.
FSSAI serious about Safety of Products from Delivery Apps
Food safety is not a matter to be taken lightly since it could not only be a health hazard to individuals but it could lead to mass epidemics. FSSAI has ensured disgruntled customers of the food-delivery apps that more than 90-95% of businesses will be compliant with their food safety standards by the end of September 2018. Currently, an estimated 30-40% of the restaurants on these platforms appear to be in non-compliance with the directive for acquiring FSSAI license.
The regulatory body of FSSAI has also employed the services of an external audit-firm to help with carrying out safety checks across the restaurants listed in the food-delivery platforms. FSSAI has also requested for the likes of Swiggy, Zomato to integrate hygiene ratings in their platforms. Swiggy has replicated the understanding of the gravity of the situation by deploying the services of Equinox Labs , A FSSAI accredited food-auditing firm .As of this day, Swiggy and Zomato have 40,000 and 50,000 restaurants respectively under their platforms which could result in over-extension in the time frame of applying this policy but one thing is for sure the government will not put up with unsafe food practices or platforms that help in the sale of such products.
“This article has been contributed by Hardik Vats who is a content writer with LegalRaasta. Legal Raasta is an online portal that assists companies and startups with company registration, GST registration, Food License, Trademark registration.”
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Restructuring Corporate Offenses: Government Appointed Panel Suggests in-house adjudication system
Special Courts and their Plight
Special Courts are up to their necks deep in corporate fraud cases with serious offenses. In this mess of serious offenses, many routine procedural errors and lapses are piling onto the pending cases and cluttering the justice system for corporates. In a pursuit, to "de-clog" the system, a 10-man government-appointed committee chaired by Mr. Injeti Srinivas are looking to bring about radical changes by restructuring corporate offenses. This attempt also comes as part of larger efforts by the government to enhance the Ease of Doing Business and improving ROC compliances. The Ministry of Corporate Affairs has also made brilliant strides to promote faster company registration procedures with One-Day Company Incorporation with SPICe.One outstanding and radical change the panel suggests is the appointment of an in-house adjudication system to facilitate freeing up the workload on the special courts.
Restructuring Corporate Justice
It is clear that the special courts need a helping hand of support if they are to deliver justice for wrongdoings by fraudulent individuals. A vast array of changes and re-structuring of the system might come as a sigh of huge relief to the judicial system.
Let's break down the changes to system suggested by the committee.
Serious offenses categorized into six different classes are to remain under the rigors of the law. However, the panel recommends that procedural and technical lapses falling under two classes should be shifted under the jurisdiction of an in-house adjudication system. This move is directly aimed at reducing the number of prosecutions filed with the Special Courts.
A move to simplify the resolution of minor technical and procedural offenses has been settled pretty well by suggestions of the committee. Apart from this the committee also stresses that they wish to simplify compoundable offenses as well. Suggestions from the panel request for the following changes:
· 16 out of 81 compoundable offenses to be re-categorized
· Shifting the jurisdiction of said 16 offenses from Special Courts to an in-house adjudication system
· Compoundable Offences Jurisdiction shifted from Special Courts to 'in-house E-adjudication framework wherein defaults would be subject to levy of penalty by the authorized adjudicating officer (Registrar of Companies)"
· Remaining 65 offenses to stay under Jurisdiction of Special Courts to prevent potential misuse.
· Status Quo for non-compoundable offenses which are in relation with serious violations
· Instituting a transparent Online Platform for E-adjudication and E-publication of orders
· The cross-cutting liability under section 447, which deals with corporate fraud would continue to apply wherever fraud is found.
Governance Simplification
The government-appointed panel was set up in July of 2018 to review and possibly restructure the current framework for dealing with offenses under the Companies Act, 2013. Apart from restructuring offenses, a sincere attempt is being made for ease of doing business, simplifying compliances along with smoother governance process for corporations.
The committee has a radical and comprehensive array of changes in mind related to governance as well as disclosure of corporate affairs. Here we list down some of the changes suggested for easier governance of companies.
1. De-registration of Companies on non-maintenance of Registered Office.
2. Disqualification of Directors continuing their directorship beyond permissible time period. A capping of director's remuneration can be done on a percentage of income earned basis
3. Enabling the Central Government with the power to approve the altering of a Companies Financial Year with the under section 2(41) of Companies Act, 2013
4. Giving Central government the power of approving the conversion of Public companies into Private companies under Section 14 of the Companies Act, 2013
5. In a pursuit to deal with the menace of Shell companies, The panel suggests reintroducing the declaration of Commencement of Business
6. A greater extent of disclosures with regards to public deposits.
7. Reducing Time Limits on filing documents for satisfaction, modifications, and creation of Charges.
Conclusion
It is refreshing to see the government making conscious attempts to streamline the judicial processes for corporations. These suggested changes, if implemented correctly, can really help revolutionize corporate law in India. Whether or not these changes will be implemented correctly or will be implemented at all, remains an unsolved mystery like most radical changes government seems to suggest. A judicial system, corporations, and wrongly accused individuals all watch with a hopeful eye as these changes unfold.