CA Mehul S. Shah
Goods and Service Tax (GST) is likely to be introduced from 1.7.2017 and will bring enormous changes in the Central and State Indirect tax structure and compliance processes. Government has applied all its forces and put in best possible efforts in formulating law, installing system, training government officials and educating and assisting citizens. It seems Government is fully geared up for implementing GST. Understanding enormity of GST is still a biggest challenge for the industry. As the implementation date is approaching, industry needs to gear up for the transition and to make Unit GST compliant. Keeping this in view, an insight on things needs to be installed for making Unit GST compliant is given here in below :
- Business Opeation : Business cases with impact of change in revenue and margins
- Supply Chain : Operating Model, Sourcing, Distribution, Setting up warehouses etc.
- Tax implications : Rate of Taxes, Time and Place of Supply, Valuations, Tax Credits
- Financials : Costing, Pricing, Working Capital requirements
- Technology : Data input, Generating tax liability, Reports, Audit etc.
- Compliance : Registration, Tax payments, Returns, Assessments etc.
- Human Capabilities : Education and Training to Staff
- First and foremost the unit needs to develop various business cases with the impact of change on revenues and margins and accordingly formulate/revised their business plans and its implementation program.
- Assess impact of GST on supply chain operating model, sourcing, distribution, setting up warehouses etc. and to make changes to suit GST.
- With introduction of GST majority of Central and State Taxes will subsumed and therefore all registration pertaining to such taxes requires migration to GST. All existing registrations will be migrated in one go except state wise VAT registration which needs to be migrated separately for each state.
- Analyse the financial impact of Closing Stock and Balance in Input Tax Credit as on cut off date (30.6.2017 presently). This requires ascertaining tax liability of closing stock sold after GST being applicable and availability of input tax credit on taxes paid under existing law and its impact on goods sold under GST. All conditions prescribed for availing input tax credit shall be fulfilled for getting benefit of taxes paid.
- All refunds and pending litigations will be dealt with as per the provisions of existing law and shall be processed accordingly. All existing refunds are not available for set off against GST and therefore require specific attention.
- Review tax implication of products / services under existing law vis a vis GST with specific attention needs to be given for exempted goods/services under existing law.
- Ensure availability of Input Tax Credit in respect of taxes paid for various goods/services used for final products/services, understand various conditions of availing, utilising and claiming input tax credit.
- Carry out financial impact analysis of GST. Find out difference of tax payable under existing law and tax payable under GST taking in to consideration benefit available in respect of Input Tax Credit.
- Installed process of selection of suppliers of goods and services as this will have impact on benefit available in respect of input tax credit. Doing purchases with unorganised vendors may result in to financial loss.
- Installed adequate standardised Information Technology System for process of preparing and issuing invoices, matching invoices and input tax credit, generating tax liability, data input, reports, preparing returns, validations etc.
- Understand and take note of manner in which accounts and records are to be maintained.
- Keep in mind the basis of determining tax liability. Determine nature of transaction i.e. Intra State (CGST and SGST) or Inter State (IGST) for tax liability, Identify place of supply of goods/services to determine Intra State or Inter State transaction, Identify Time of supply of goods/services to prepare invoice and point of occurring tax liability and set off tax liabilities between IGST, CGST and SGST.
- List of various rules prescribed under GST are as follows :
Sr.No. Rules Describing 1 Valuation Rules Valuation of goods /services in different circumstances for determining tax liability 2 Transition Rules Migration from existing law to GST – registration, input tax credit etc. 3 ITC Rules Conditions for availability and utilisation of input tax credit 4 Composition Rules For small businesses up to turnover of Rs.75 lacs (upward revision already proposed) – lumpsum tax with no credit or collection of tax 5 Invoice Rules Format and manner of preparing and issuing invoice 6 Payment Rules For making tax payments and claiming creditElectronic cash ledger – tax, interest and penalty register,Electronic credit ledger – input tax register 7 Refund Rules Refund of tax, interest, penalty, fees or other amount 8 Registration Rules Procedures and documentations for migration of existing registrations and making new registrations 9 Return Rules Requirements and process of filing monthly / quarterly and annual returns 10 Accounts and Records Nature of accounting records and manner of keeping them 11 Advance Ruling Prior approval / confirmation of GST liability in case of doubts 12 Appeals and Revision For all disputed matters 13 Assessment and Audit Regular assessment and audit 14 E-Way Bill Online transport document to be generated before commencing movement of goods with prescribed validity period depending upon km.