Regular accounting implies for people who are registered for Goods and Services Tax. They need to be regular with this cash system of accounting. Under this cash basis accounting, you are required to pay GST, on the sales that are taxable. You claim for your GST credits in this cash system of accounting, after calculating your eligibility. This calculation is according to the accounting credits of GST.
The tax periods for GST depend on whether you are following a cash basis accounting or a non-cash system of accounting.
There are notable points of cash system of accounting, and thus if you choose cash basis you must then
- Account for GST that is particularly payable on the sales you make within the tax period. The payments you receive while that period is on is only required to be taxed by GST.
- If you get a part of your pay, for a particular sale that has been made during the period, you are eligible to pay tax, only on that particular amount.
- You can very well claim for your GST credits, while you tax period is still on.
- A valid invoice for the cash that you have paid as tax accounting is mandatory for claiming your credits.
- Wait for an invoice from the supplier, even if you have to claim the credits for the later period.
Here are some of the benefits of cash accounting system of GST
One of the biggest benefits that are enjoyed by people who choose cash accounting basis, is that you will not be forced to pay taxes, during the period, until the customer has paid for the sales that you have done for that particular order.
When one chooses the cash system for accounting in GST, it enjoys the benefits of relief during Bad Debts.
In fact, this is the most preferred method of GST chosen by people. Cash accounting is convenient, beneficial and suitable for Small Business Accounting, as well as established firms.
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