A small business owner modelling GST and monthly cash flow
₹68 lakh of annual billings at 18% GST. The business was profitable on paper and short of cash every quarter — the timing of GST payments explained why.
Situation
A 12-person services firm in Pune bills about ₹68 lakh a year, invoicing on 45-day terms.
GST at 18% is collected on every invoice and deposited by the 20th of the following month, regardless of whether the client has paid.
The result: a profitable P&L alongside a recurring cash squeeze in the first week of every quarter.
What they calculated
Splitting inclusive versus exclusive quotes and the CGST/SGST components per invoice.
True monthly payroll outflow including employer PF and ESI.
Advance tax instalments landing in the same weeks as GST.
Cost of funding the gap with an overdraft versus holding a buffer.
Inputs used
- Annual billings
- ₹68,00,000
- GST rate
- 18% (9% CGST + 9% SGST)
- Average client payment terms
- 45 days
- Monthly payroll
- ₹3,90,000
- Monthly input GST credit
- ₹34,000
- Overdraft rate
- 12% p.a.
The numbers
- At 18%, annual GST collected is ₹12.24 lakh, split ₹6.12 lakh CGST and ₹6.12 lakh SGST on intra-state work.
- Input credit of ₹34,000 a month reduces the net annual liability to about ₹8.16 lakh.
- With 45-day terms, roughly ₹8.5 lakh of billed revenue is outstanding at any time while its GST is already due.
- Payroll of ₹3.9 lakh plus GST of ₹68,000 plus advance tax lands in the same seven-day window at each quarter start — a ₹4.1 lakh peak gap.
- Funding that gap on a 12% overdraft for an average 40 days each quarter costs about ₹49,000 a year.
- Ring-fencing GST collections into a separate account the day an invoice is paid removes the gap entirely.
Outcome
GST stopped being treated as revenue: collections now move to a separate account on receipt.
Client terms were shortened from 45 to 30 days on new contracts, with a 2% early-payment discount offered on the rest.
The overdraft was retained as a facility but drawn only twice in the following year.
Quarterly advance tax was estimated in advance with the income tax calculator instead of being discovered late.
Split any invoice into base value, CGST and SGST in seconds — inclusive or exclusive.
Questions this raises
More case studies
No quote on this page is attributed to a real individual. Figures are modelled with the public Calculyx AI calculators using the inputs listed above.