The government instituted tax standardization in order to promote national welfare and economic growth. The Central and State Governments used to levy a variety of taxes in accordance with a number of acts described by direct, indirect, and other tax laws. The government has eliminated a number of taxes over the years, including the interest tax, gift tax, and inheritance tax. Taxes are often divided into two categories: direct taxes and indirect taxes. These taxes are further divided into other categories such as income tax, goods and services tax, customs duty, service tax, central excise, etc.
Introduction of GST
GST was introduced in 2017 by the Government of India to eliminate several levels of taxes such as service tax, surcharges, state-level value-added taxes, central excise duty, additional customs duty, and octroi. GST is imposed on all transactions including sales, purchases, transfers, barter, lease, and import of goods and services. 0%, 5%, 12%, 18%, and 28% are five different tax slabs for GST. Commodities such as electricity, alcoholic drinks, and petroleum products are not taxed under GST. Furthermore, GST is further categorised as Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST), and Integrated Goods and Services Tax (IGST). The introduction of GST solved the complex problem of multiple tax regimes that impacted the businesses and citizens of India. Also, it brought relief for the customers by reducing the multi-taxes on the same products and services.
Impact of GST on Business Loan
With the introduction of GST, Business Loans have become slightly expensive. Earlier, Business Loan had a 15% service tax, and with the implementation of GST that has increased to 18%, and there is no GST on Business Loan interest rate. This has increased the processing fees making it a bit expensive for borrowers. However, in long run, the introduction of GST has made overall borrowing more streamlined, simplified, and efficient.
Also Read: Everything You Need to Know About GST on Loans
Why Should You Apply for a Business Loan?
Irrespective of the charges and taxes, a Business Loan is beneficial when it comes to fulfilling the need for additional capital. It is one of the fastest and safest methods of getting funds needed for a business. There are various types of Business Loans that you can apply for such as Business loan for Working Capital, Business Loan for MSMEs, Business Loan for proprietorship, Business Loan for Women, etc. Below are a few more reasons why you should apply for a Business Loan right now:
- Instant loan approval
- Minimal documentation
- Loan up to Rs. 50 Lakh
- Competitive interest rates
Conclusion
Undoubtedly, with the changes in the tax regime, there is an impact of GST on business loan fees and charges as it has increased overall costs for the borrowers. However, attractive features from lenders like creditsuccess makes applying for a loan a much more pleasant experience.
As you don’t have to worry about GST on Business Loan interest rate, you can use Business Loan for catering to different needs such as buying day-to-day inventory, making miscellaneous payments, buying, or upgrading new machinery, etc. To know more about creditsuccess product suite, you can visit our website.
FAQs
What is GST’s full form?
GST’s full form is Goods and Services Tax. It was introduced to create a uniform taxation system across India.
When was GST introduced in India?
GST was implemented on 1st July 2017 in India to eliminate multiple levels of taxes and create a uniform taxation system throughout the country.
What are the new rules for GST?
The service tax applicable on Business Loans has been updated from 15% to 18% under the new rules of GST. However, there is no tax applicable on the interest amount.
