Maharashtra Board Class 10 Maths Part I Chapter 4 Financial Planning PDF Download

Financial Planning

Let's Discuss

Teacher: Dear students, in our country which tax system is in practice for business?

Ayush: GST system is in practice.

Teacher: Very good! What do you know about GST?

Ayan: GST stands for Goods and Service Tax.

Aisha: Yes, the whole country follows the same tax levy system.

Teacher: Correct, before GST every state had variety of taxes levied at different stages of trading. Observe the picture given below and tell which taxes existed before GST and are now subsumed in GST?

Shafik: Taxes that existed before were Excise Duty, Custom Duty, VAT, Entertainment tax, Central sales tax, Service tax, Octroi etc.

Teacher: All these taxes are subsumed under GST, that is why GST is One nation, One tax, One market. GST is in effect from 1st of July 2017.

Teacher's Note

GST replaced many old taxes in India. For example, your school uniform or book might have had VAT and Excise Duty before, but now they just have one tax called GST.

Exam Trick

Remember: GST = One nation, One tax. All old taxes (VAT, Excise, Service tax) are now inside GST. Like many colors mixed to make one color.

Points to Remember

GST stands for Goods and Service Tax.
GST started on 1st July 2017 in India.
Many old taxes are now combined into GST.
GST is the same in the whole country.
Before GST, different states had different taxes.

Let's Study

Tax Invoice

Tax Invoice of goods purchase (Sample)

SUPPLIER: A to Z SWEET MART GSTIN: 27ABCDE1234H1Z5

143, Shivaji Rasta, Mumbai: 400001, Maharashtra.

Mo No. 92636 92111 e-mail - atoz@gmail.com

Invoice No. GST/110 Invoice Date: 31-Jul-2017

Ved: In the invoice we see some new words, please explain them.

Teacher: CGST and SGST are two components of GST. CGST is Central Goods and Service Tax which is to be paid to the central government. Whereas SGST is State Goods and Service Tax which is to be paid to the state government.

Ria: What is in the right most corner with a long queue of numbers and alphabets?

Teacher: It is GSTIN, dealer's identification number. (GSTIN- Goods and Service Tax Identification Number). GSTIN is mandatory for the dealer whose annual turn over in previous financial year exceeds rupees 20 lacs. You know that PAN has 10 alpha-numerals, similarly GSTIN has 15 alpha-numerals. It includes 10 digit PAN of the dealer.

For example: 27 A B C D E 1 2 3 4 H 1 Z 5

10 digit PAN of the firm

Note: Here 27 is the state code of Maharashtra. From 27, one can understand that a person or a firm is registered in Maharashtra. 1 represents one registration. Uniform for all (By default). Check sum digit (confirms the validity of GSTIN when entered on GST portal). 2 digits for state code.

Jennie: There is a word HSN code in the tax invoice.

Teacher's Note

HSN code is a number given to all goods in India. It helps the government track what things are being sold.

Exam Trick

Remember: HSN = code for goods. SAC = code for services. Like your roll number in school, but for products.

Points to Remember

GSTIN has 15 letters and numbers for business registration.
CGST is tax paid to central government.
SGST is tax paid to state government.
HSN code is used for goods and products.
Every product has its own HSN code.

Teacher: All Goods are classified by giving numerical code called HSN code. It is to be quoted in the tax invoice. Full form of HSN is Harmonized System of Nomenclature.

Joseph: As usual there is name of the shop, address, state, date, invoice number, mobile number and e-mail ID also in the tax invoice.

Teacher: Now we will see how the GST is charged for each product (Goods) in the bill. Observe the given bill and fill in the boxes with the appropriate number. Price of 1 kg of Pedhe is ₹ 400, therefore cost of 500 gm. of Pedhe is ₹ 200.

CGST at the rate of 2.5% is ₹ and SGST at the rate of % is ₹ 5.00.

It means that the rate of GST on Pedhe is 2.5+2.5=5% and hence the total GST is ₹ 10.

The rate of GST on chocolate is % and hence the total GST is ₹

Rate of GST on Ice-cream is %, hence the total cost of ice-cream is ₹

On butter CGST rate is % and SGST rate is also %. So GST rate on butter is %.

Aditya: Rate of GST on bread is 0 %. The rate of CGST and SGST is same for each product.

Ninad: Rates of GST are different for different products such as 0%, 5%, 12%, 18% and 28%.

Teacher: These rates are fixed and prescribed by the government.

Now let us observe the tax invoice of services provided. Fill in the blanks with the help of given information.

Tax Invoice of Services Provided (Sample)

Food Junction, Khed-Shivapur, Pune Invoice No. 58

Mo. No. 7588580000 email - ahar.khed@yahoo.com

GSTIN: 27 AAAAA5555B1ZA Invoice Date 25-Dec-2017

Teacher: Compare both, Goods and Service Tax invoices and find the difference in codes.

Teacher's Note

Service tax invoice uses SAC code instead of HSN code. Both help organize and track taxes for government records.

Exam Trick

Remember: Goods use HSN. Services use SAC. One letter difference = big difference in purpose!

Points to Remember

SAC is used for services and activities.
HSN is used for goods and products.
Tax invoice must show all details clearly.
CGST and SGST must be shown separately.
Invoice helps track tax money paid.

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