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Working capital, as the name itself implies, helps a business to run successfully in the low periods of the business. The importance of working capital management is that the ensuing cash flow will help the business to run smoothly and perform all the tasks properly even when the sales are slow. TheRead more
Working capital, as the name itself implies, helps a business to run successfully in the low periods of the business. The importance of working capital management is that the ensuing cash flow will help the business to run smoothly and perform all the tasks properly even when the sales are slow. There are times when no matter what, expenses like paying the rent of the premises or making the payments on the electricity bill or paying the salary of the employees have to be done even though your payment from the client is taking some time to get in.
This is where the working capital comes in as it helps tide over these important low periods. Then, when the sales are up again, and the business makes it usual profit, the loan can be paid off. There is no trouble in maintaining the inventory and there is also no financial worry. Many banks and NBFCs have very low working capital loan rates which will help an SME or MSME to tide over the occasional shortage of funds which is quite common in the initial days of business.
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Goods and Services Tax was introduced in India on 1st July 2017. It merged different taxes including import duties and VAT into one single slab for transparent and efficient management of the taxation structure. However, despite various benefits, there are some disadvantages of GST that creates loopRead more
Goods and Services Tax was introduced in India on 1st July 2017. It merged different taxes including import duties and VAT into one single slab for transparent and efficient management of the taxation structure. However, despite various benefits, there are some disadvantages of GST that creates loopholes.
1- Multiple GST rate opens a window of misuse. Currently, the different slabs are 0%, 5%, 12%, 18%, 28% and 28% plus. Vendors can manipulate input credit to minimise the levied tax.
2- Registered brand names attract higher GST. One can evade that by creating not registered but equally popular products.
3- Separating products that would otherwise come as one decreases the amount of tax payable. For example, dividing a Rs. 110 product into two items of Rs. 100 and Rs. 10 can increase profit almost Rs. 10.
4- One of the significant GST benefits is its automated process. However, if a brand opts not to trademark their business to claim tax exemptions, they can avoid automated tax calculations.
There are many advantages and disadvantages of GST for MSMEs in Indian Budget 2019. For any individual, it is vital to understand this new taxation setup and function accordingly.
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