Accounting Basics for Start Ups Taxes, Capex and Overseas Payments

Basics of VAT and CST 1->VAT and CST is applicable on sale of products 2->VAT is a multipoint tax on Sale of the product. It varies from product to product 3->VAT is applicable to intra state sales 4->CST is same as VAT and is applicable for inter state sales only. 5->VAT paid on input can be set-off against VAT to be paid on Output. 6->VAT paid on input can be set-off against CST to be paid on Output. 7->Sales tax and VAT are not required to be paid on Export / Import of Goods.

Basics of SERVICE TAX 1->Service tax is levied not only on the services rendered but also on some of the services received. 2->Service tax registration is required to be taken when the Taxable Turnover exceeds Rs. 9 Lakhs. 3->Service tax is to be paid compulsorily once the Taxable turnover exceeds Rs. 10 Lakhs. 4->Service tax paid on inputs can be set off against the service tax to be paid on output. 5->Service tax is applicable on import of services also widely known as Reverse Charge Mechanism

Basics of EXCISE DUTY 1->An excise duty is a type of tax charged on goods produced within the country. 2->It is a tax on the production or sale of a good which are listed in the Central Excise Tariff Act. 3->Goods must be movable. 4->The liability to pay excise duty is always on the manufacturer or producer of goods. 5->Duty is not payable on the goods exported out of India. 6->Excise duty paid on intermediary goods can be set off from the final liability and only difference is required to be paid.

Basics of Custom Duty 1->Custom Duty is charged on the imports into India and exports out of India. 2->All goods imported into India are chargeable to Duty under Customs Act. 3->Custom Duty consists of various components viz. The Basic Custom Duty, The countervailing duty, Additional Duty etc. 4->Countervailing duty is in lieu of excise duty. 5->Additional Duty is levied in lieu of the sales tax. 6->Custom Duty can be claimed back in case of export of Goods.

What are Capital Goods / Equipment 1->Any tangible assets that an organization uses to produce goods or services such as office building, equipment and machinery. 2->Capital goods represents a major expenses for businesses. 3->The Capital Goods that a business does not use in a single year of production cannot be entirely deducted as business expense in the year they are purchased. 4->Capital goods having more than one year of useful life are depreciated over the useful life of the assets. 5->Capital Goods can be purchased either out of the own funds or Grants received.

6->Capital Goods purchased out of own capital is accounted for in the books under the Heading “Fixed Assets”. 7->Capital Goods purchases out of grant are shown as a deduction from the gross value of the asset concerned under the Heading “Fixed Assets”. 8->If whole of the Capital Assets is purchased out of Grant then only nominal value of Capital Assets is shown in the Assets.

OVERSEAS PAYMENT 1->Not as simple as domestic payments. 2->Required to send the invoice along with the Agreement to your Chartered Accountant. 3->Need to obtain Chartered Accountant’s certificate in Form No. 15CB stating about the taxability of transaction amongst various other reporting requirement. 4->Need to fill online Form known as 15CA and submit to the Income Tax Department. 5->Download the submitted form from the Income Tax Website.

6->Submit the Form No. 15CA, 15CB, along with other documents to the Bank for effecting payments. 7->Make the payment of TDS and Service Tax, if applicable, within due date. 8->Avoid making the payment through Debit Card or Credit Card because in this way you avoid Tax payment or may even forget to make Tax payments which is not lawful THANK YOU