Gst For Entrepreneurs Epub

GST FOR

ENTREPRENUERS CA Jigar Shah

Editorial Board CA Ashutosh Rathi CA Dinesh Tejwani CA SK Rathi Mr. Annkur Agarwal Published By RMoss Prints Private Ltd Marketed by Mr. Annkur Agarwal Mr. Keyur Shah Layout and Formatting Mr. Dalton Pereira Special Thanks Mr. Ajay Dedhia Mr. Deepak Pachar Mr. Aurobindo Chatterjee CA Raj Khona Copyright © CA Jigar Shah, 2017 In case of any comments, suggestions, appreciation or criticism we would love to hear from you. You can get in touch with the author on [email protected]. Readers can also post their queries on SahiGST’s knowledge centre. (https://sahigst.com/knowledge) DisclaimerNo responsibility for loss caused to any individual or organization acting or refraining from action as a result of the material in this publication can be accepted by SahiTax Technologies LLP or the author.

Acknowledgement Acknowledgement is an opportunity for me to express gratitude not only for those people who have directly contributed to this publication but also to those who have contributed in shaping me for who I am today. I am grateful to my parents (Mr Rakesh V Shah and Mrs Dina R Shah) for always being supportive and letting me choose the path I want to tread in life. I would like to acknowledge each and every person at RR Muni & Co. especially CA Rajesh Muni, CA Divyesh Muni, CA Aleem Kureshi and CA Toral Mehta. RR Muni is the firm where I did my articleship. The firm instilled values of excellence in me. I owe my work ethics and values to this firm. Next, I would like to extend my gratitude to CA S.K. Rathi for giving me an opportunity to partner in his firm and bestowing upon me the responsibility to take it ahead. I would like to thank my team at S.K. Rathi & Co. for being brilliant at their work. I was able to enjoy the luxury of taking out the time to write this book only because of the support that my team had provided me with. I would like to acknowledge and thank CA Dinesh Tejwani for being the guiding force behind me and believing in me. Lastly, I would like to thank that one person without whom this book was not possible, CA Ashutosh Rathi. I have never met a person as selfless as him. He has been an absolute stand for me always pushing me out of my comfort zone and enabling me to come out with this book. No matter how much I write I will fall short of words to describe his contribution to my life and this book.

Index Introduction

1

Taxes in India

2

Introduction to GST

4

Evolution of GST in India

5

Structure of GST in India

6

Present Tax System Vs GST

9

Registration Requirements

18

Composition Scheme

22

What is Supply

24

Determining Mixed and Composite Supply

30

GST and E-Commerce

32

Input Tax Credit

36

Returns in GST

40

Who Files What and When

41

Non-filing of GST Returns on time?

47

Reverse Charge Mechanism

48

How to get GST ready?

49

GST- Good or Bad?

50

Introduction Goods and Service Tax (GST) is set to transform the way business is done in India. Our Government, along with professional bodies like the Institute of Chartered Accountants of India(ICAI) have been committed to share knowledge with professionals and business communities. However, we have observed that there is a huge need to translate the complex law into an understandable text and assess it’s impact on every business. This book has been created with the intention of filling up this need. Good amount of effort has gone into simplifying the complex GST law. The Intention is to give a broad understanding of the subject to the Entrepreneur. In fact, this might be the only book on a law which does not have a single reference to a section of any particular Act. Terminologies used in the book might be technically incorrect but once again the intention is to give a broad understanding. For example, the term “business” has been used instead of “registered taxable person” at many places. Similarly “sales” is used instead of “supply”. Technically, there is a difference between “sales” and “supply” and it cannot be used interchangeably when someone is giving a professional opinion or making a representation to authorities. This book has been designed in such a manner that a reader gets to know all important aspects of GST law in less than 3 hours.

1

Taxes in India Before diving into GST, lets first have a look at how the taxation system works in India. India is a federal nation. This means that in India responsibilities are divided between central Government and state governments. The Constitution of India segregates various responsibilities vide the following lists. Union list, lists down responsibilities of central government. Concurrent list, lists down responsibilities which is shared by both central and state government. Union List • • • • •

Defence Currency Banking Foreign Affairs Railways, etc

State List • • • • •

Police Agriculture Roads Water Supplies Irrigation, etc

Concurrent List • • • •

Criminal Law Bankruptcy & Insolvency Trust & Trustees Protection of Wild Animals, etc

In order to fulfil these responsibilities, government needs funds which are collected in the form of various taxes from citizens. Broadly there are two types of taxes in our country. 1. Direct Taxes Direct Taxes, as the name suggests, are taxes that are directly paid to the government by the taxpayer. It is a tax charged to individuals and organizations directly by the government e.g. Income Tax. 2. Indirect Taxes Indirect Taxes are charged on manufacture or sale of goods and services. These are taxes that are passed onto the consumers. Eg. VAT, Service Tax etc.

2

Taxes in India Indirect Taxes in India

Excise Duty

Service Tax

VAT/CST

On Manufacture

On Provision of Services

On Sale

Custom Duty

Entry/Octroi

On Import and Export

On Entry of Goods

From above, we can see that there are too many types of indirect taxes in our country. Hence, for the overall development of the nation and ease of doing business in India, the idea of Goods and Service Tax (GST) was introduced for the first time in our country by Atal Bihari Bajpayee Government in the year 2000.

3

Introduction to GST Goods and Service Tax (GST) is a ‘single taxation’ system that will streamline almost all the different types of indirect taxes. As the name suggests, the GST will be levied on both, goods and services.

Single GST & Dual GST

In single GST system tax is collected only by central government whereas in dual GST system tax is collected by central government as well as state governments. Many countries in the world have a single unified GST system i.e. a single tax applicable throughout the country. However, in countries like Brazil and Canada, dual GST system is prevalent whereby GST is levied by both central and state governments. India has adopted dual GST system.

GST around the globe

France was the first country that introduced a comprehensive GST Regime in 1954. GST rates in various countries ranges from 5 per cent in Taiwan to 25 % in Denmark. In India, GST will be charged in the following mannerGST Rates

Probable Goods & Services

Exempted

Basic Education, Healthcare, Agriculture, Public Transport etc.

Zero Rated

Essential items, including goods, 50% of items under Consumer Price Index(CPI) including food grains.

5%

Essential items, Gold/Silver

12%

Rate for Basic Commodities

18%

Standard Rate for Goods and Services

28%

Items currently taxable with 30-31% like partial luxury items

28% + Cess

Luxury & De-merit goods (Like Luxury Car, Tobacco, Cigarettes)

Will be brought in GST at a later stage

Petroleum and Petroleum Products

Out of GST

Alcoholic Liquor for human consumption

4

Evolution of GST in India Year 2000 Vajpayee Government starts discussion on GST

Year 2006 GST is proposed to be implemented by 01/04/2010 by Finance Minister P. Chidambaram

Year 2010 Finance Minister Pranab Mukherjee mentions in his budget speech that GST to be introduced by April 2011

Year 2011 The constitution 115th Amendment Bill introduced in Loksabha for levy of GST but the bill is not passed

Year 2014

May 2014 - BJP comes into power

Year 2015 The constitution 122nd Amendment Bill is Approved

Year 2017 GST will see the light of the day latest by September 2017

5

Structure of GST in India There will be 4 different types of GSTs in India. 1. Central Goods and Services Tax (CGST) 2. State Goods and Services Tax (SGST) 3. Union Territory Goods and Service Tax (UT-GST) 4. Integrated Goods and Services Tax (IGST) Let us see which tax is to be charged when

Goods Supplied or Services Provided

Within the Union Territory

Within the State

Between two States/Union territories

UTGST

SGST

IGST

CGST

CGST

6

Structure of GST in India Assumed Rate of GST: 18% Case 1 - Within State Sells Goods @ Rs. 1,000/-

Sky Goods Pvt Ltd Maharashtra

Infi Traders Pvt Ltd Maharashtra

In this case, tax will be charged in the following manner Particulars

Amount (Rs.)

Sale Value

1,000/-

CGST @ 9%

90/-

SGST @ 9%

90/-

Total

1,180/-

Case 2 - Within Union Territory Sells Goods @ Rs. 1,000/-

Sky Goods Pvt Ltd Daman

Infi Traders Pvt Ltd Daman

In this case, tax will be charged in the following manner Particulars Sale Value

Amount (Rs.) 1,000/-

CGST @ 9%

90/-

UTGST @ 9%

90/-

Total

1,180/-

7

Structure of GST in India Case 3 - Inter State Sales Sells Goods @ Rs. 1,000/Sky Goods Pvt Ltd Maharashtra

Infi Traders Pvt Ltd Gujarat

In this case, tax will be charged in the following manner Particulars

Amount (Rs.)

Sale Value

1,000/-

IGST @ 18%

180/-

Total

1,180/-

Present Tax System Vs GST Currently, multiple types of taxes are charged by central government as well as state government.

Indirect Taxes in India

Central Government

State Government

Customs

Value Added Tax

Excise

Entry Tax

Service Tax

Luxury Tax

8

Present Tax System Vs GST Let’s first understand - What is Input Tax Credit? Mr A is a manufacturer in the business of selling shirts. Let us assume that VAT on shirt is charged at 10%. He sells the shirt to Mr B, a retailer and Mr. B sells it to Mr. C the consumer.

ntral Sells to

Sells to

Retailer

Wholesaler

INVOICE

Customer

INVOICE

Sales

Rs. 100

Sales

Rs. 150

V.A.T

Rs. 10

V.A.T

Rs. 15

Total

Rs. 110

Total

Rs. 165

VAT to be paid by the Retailer VAT on Sales to Customer

Rs. 15

Input Tax Credit

Rs. 10

Net VAT Payable

Rs. 5

Over here, Retailer pays Rs.10/- as VAT to Manufacturer which will be passed on to the state government by the Manufacturer. Customer pays Rs. 15/- as VAT to Retailer Now, as Retailer has already paid Rs. 10/- to Manufacturer as VAT, he will take Input Tax Credit of the same and pay only Rs. 5/- to government. The irony is that input credit of the taxes paid to central government cannot be used to pay taxes to the state government.

9

Present Tax System Vs GST In order to appreciate the need for GST in Indian economy one needs to have a closer look at the current taxation system and its shortcomings. Let us have a look at various transactions and see the tax implications in present tax system and in the GST regime.

Scenario 1(Present Tax System)-

Aggarwal Ltd is in the business of manufacturing of cell phones in Maharashtra. Excise duty on cell phones is 4% MVAT (Maharashtra VAT) on cell phones is 13.5%. Assessable Value of cell phone is Rs. 10,000/- . It sells the cell phone to Shah Dealers.

Sale @ Rs. 10,000/-

Aggarwal Ltd Maharashtra

Shah Dealers Maharashtra INVOICE Sale Excise@4% [email protected]%

Total

Rs. 10,000 Rs. 400 Rs. 1,404

Rs.11,804

Shortcomings

1. Excise Duty as well as MVAT is charged on the same transaction. Excise duty goes to central government and MVAT goes to state government. 2. MVAT is to be charged on Rs. 10,400/- i.e. amount including excise amount. Thus, there is tax on tax. This is also known as cascading effect.

10

Present Tax System Vs GST Scenario 1(GST) Aggarwal Ltd is in the business of manufacturing of cell phones in Maharashtra. Expected GST rate on cell phones is 12% Taxable Value of cell phone is Rs. 10,000/- . He sells the cell phone to Shah Dealers.

Sale @ Rs. 10,000/-

Aggarwal Ltd Maharashtra

Shah Dealers Maharashtra

INVOICE Sale CGST@6% SGST@6%

Total

Rs. 10,000 Rs. 600 Rs. 600

Rs. 11,200

Comments • • • •

No separate taxes on manufacture and sale. Reduction in cost due to savings in taxes. Cost has reduced from Rs. 11,804/- to Rs. 11,200/- i.e savings of Rs. 604/-. Reasons for lower taxes - Lower rate of tax and No Tax on Tax. Savings due to introduction of GST will have to be passed on to the consumer.

11

Present Tax System Vs GST Scenario 1- Continued (Present Tax System) Shah Dealers further sells the cell phone to Rathi Retailers for Rs. 20,000/MVAT (Maharashtra VAT) on cell phones is 13.5%. Sale @ Rs. 20,000/-

Shah Dealers Maharashtra

Rathi Retailers Maharashtra

TAX PAYABLE

INVOICE Sale

Rs. 2,700

MVAT ITC (Refer Pg. 14)

- Rs. 1,404

Rs. 22,700

Net VAT Payable

Rs. 1,296

Rs. 20,000

[email protected]%

Total

Rs. 2,700

Shortcomings • Credit of excise duty is not available for payment of VAT • Excise becomes a cost for the wholesaler Scenario 1- Continued(GST) As there was a saving of Rs. 604/- in the earlier stage because of reduction in taxes it is mandated by the law that such saving should be passed on to the consumer. Shah Dealers will have to reduce their selling price. Shah Dealers sold the cell phone to Rathi Retailers for Rs. 19,396/- (Rs. 20,000/- - Rs. 604/-). GST rate is 12%. Sale @ Rs. 19,396/-

Shah Dealers Maharashtra

Rathi Retailers Maharashtra

TAX PAYABLE

INVOICE Sale

Rs. 19,396

CGST@6%

Rs. 1164

SGST@6%

Rs. 1164

Total

Rs. 21,724

CGST - ITC(Rs. 600)

Rs. 564

SGST - ITC(Rs. 600)

+ Rs. 564

Tax to be Paid

Rs. 1128

12

Present Tax System Vs GST Scenario 2 (Present Tax System)- Transactions between two states

Khan Enterprise, a wholesaler in Gujarat sells cell phone to Rathi Retailers in Maharashtra for Rs. 10,000/- . Assuming that Rathi Retailers will issue Form C to Khan Enterprise, 2% CST will be charged on the transaction. If Form C is not issued full tax of 15% will be charged. Rathi Retailers sold the mobile phone to his customer at Rs.20,000/-. MVAT Rate is 13.5%

Sale @ Rs. 10,000/-

Khan Enterprise Gujarat

Sale @ Rs. 20,000/-

Rathi Retailers Maharashtra

Customer Maharashtra

Form C

INVOICE Sale CST@2%

Total

INVOICE Rs. 10,000 Rs. 200

Rs. 10,200

Sale

Rs. 20,000

[email protected]%

Rs. 2,700

Total

Rs. 22,700

Shortcomings • • • •

Credit of CST is not available for payment of VAT. If Form C is not received from the purchaser the seller has to pay full tax from his pocket. The seller has to maintain extensive record for the purpose of assessment Retrieving data after three years for the purpose of assessments is very time consuming and cumbersome.

13

Present Tax System Vs GST Scenario 2 (GST)- Transaction between two states

Khan Enterprise, a wholesaler in Gujarat sells cell phone to Rathi Retailers in Maharashtra for Rs. 10,000/GST Rate is 12% Rathi Retailers sold the mobile phone to his customer at Rs.20,000/-

Sale @ Rs. 10,000/-

Khan Enterprise Gujarat

Sale @ Rs. 20,000/-

Rathi Retailers Maharashtra

INVOICE Sale

INVOICE Rs. 10,000

IGST@12%

Rs. 1200

Rs. 11,200

Total

Customer

Sale

Rs. 20,000

CGST@6%

Rs. 1200

SGST@6%

Rs. 1200

Total

TAX PAYABLE

Rs. 22,400

TAX PAYABLE

CGST

Rs. 1200

SGST

IGST

- Rs. 1200

IGST

Rs. 0

Rs. 1200 - Rs. 0 Rs. 1200

Advantages • • • •

Free flow of credit Form C is no longer required Corruption will go down as invoice matching will be done upfront with the help of technology As octroi and entry tax are subsumed there will be free flow of goods.

14

Present Tax System Vs GST Scenario 3 (Present Tax System)

Kuber Consultants provides management consultancy for increasing sales to Magnitude Electronics. Consultancy Charges – Rs. 1,00,000/Purchase of Mobile phones from Shah Dealers – Rs. 1,25,000/Total sales of mobile phones by Magnitude to customers– Rs. 2,50,000/INVOICE Sale

Rs. 100,000

Service Tax@15%

Rs. 15,000

Rs. 115,000

Total

Kuber Consultants Sale @ Rs. 250,000

Magnitute Electronics

Customer

INVOICE Sale

Shah Dealers

MVAT

INVOICE Sale MVAT

Total

Total

Rs. 250,000 Rs. 33750

Rs. 283,750

Rs. 125,000 Rs. 16875

Rs. 141,875

TAX PAYABLE Shortcoming Credit of service tax is not available or payment of VAT and vice versa

MVAT MVAT

Rs. 33,750 - Rs. 16,875 Rs. 16,875

15

Present Tax System Vs GST Scenario 3 (GST)

Kuber Consultants provides management consultancy for increasing sales to Magnitude Electronics. Consultancy Charges – Rs. 1,00,000/Purchase of Mobile phones from Shah Dealers – Rs. 1,25,000/Total sales of mobile phones by Magnitude to customers– Rs. 2,35,000/-

Kuber Consultants

Shah Dealers

INVOICE Service Cost

INVOICE Rs. 100,000

Goods Cost

Rs. 125,000

CGST@9%

Rs. 9000

CGST@6%

Rs. 7500

SGST@9%

Rs. 9000

SGST@6%

Rs. 7500

Rs. 118,000

Total

Rs. 140,000

Total

Magnitute Electronics TAX PAYABLE

INVOICE Sale Value

Rs. 235,000

CGST@6%

Rs. 14,100

SGST@6%

Rs. 14,100

Total

CGST

Rs. 14,100 - Rs. 14,100

ITC

Rs. 0

Rs. 263,200

TAX PAYABLE SGST

Rs. 14,100 - Rs. 14,100

ITC

Rs. 0

Customer Advantages • No distinction between tax on services and tax on goods • Free flow of input tax credit • Reduction in cost

ITC Available ITC (Rs. 9K + Rs. 7.5K) - ITC Utilised ITC Remaining

CGST

SGST

Rs. 16,500

Rs. 16,500

- Rs. 14,100

- Rs. 14,100

Rs. 2,400

Rs. 2,400

16

Taxes going out Central Taxes • • • • •

State Taxes

Service Tax Excise Duty Addn Custom Duty Special Addnl Duty - Customs Central Cess & Surcharges

• • • • • • •

VAT CST State Cess & Surcharges Octroi Entry Tax Luxury Tax Entertainment Tax(other than local bodies)

GST Taxes not going out • • • •

Basic Custom Duty Export Duty Road and Passenger Tax Toll Tax

• • • •

Property Tax Stamp Duty Electricity Tax Entertainment Tax levied by local bodies

17

Registration Requirements We have got a fair understanding about basics of GST and how it is different from present tax system. Now let us see whether GST is applicable to your business. There are two broad categories – Part A - All Businesses whose turnover is above threshold limits

Present Tax System

GST

Central Excise: 1.5 Cr

Rs. 20 Lacs for all except

Service Tax: Rs. 10 Lacs

specified states*

State VAT: Rs. 5 - 10 Lacs

Rs. 10 Lacs for specified

(for most states)

states*

Specified States - Arunachal Pradesh, Assam, Jammu & Kashmir, Manipur, Meghalaya,Mizoram,Nagaland, Sikkim, Tripura, Himachal Pradesh

18

Registration Requirements Part B - Specific businesses which have to register under GST irrespective of their turnover

Existing Dealers

All businesses registered under any of the existing law (Excise, Service Tax, VAT) have to mandatorily migrate to GST. If their turnover is less than threshold limit they can withdraw the registration later.

Inter-state taxable supply

Businesses making sales to parties in other states.

Casual taxable person

A person who occasionally undertakes transactions involving supply of goods and/or services in a state where he has no fixed place of business.

Person required to pay tax under reverse charge mechanism (RCM)

In RCM, the tax is not charged in the invoice but it has to calculated by the receiver of goods/services and is supposed to be paid to the government directly.

Non-resident taxable person

A person who occasionally undertakes transactions involving supply of goods and/or services in India but he has no fixed place of business.

Person who is required to deduct tax (TDS)

TDS provision in GST may require Government Departments, Local Authority, Government Agencies,etc to deduct tax at source

19

Registration Requirements Part B (Continued)

Electronic commerce operator

E-Comm Operators who collect payment on behalf of dealers have to collect tax at source. It is mandatory for such E-commerce Operators to get registered under GST. For eg., Flipkart, Snapdeal, etc

Person making any supplies made through an E-Comm Operator

All dealers making a supply through E-Comm Operators have to get registered under GST

Person acting as Agent

An agent can be a broker, factor, commission agent, an auctioneer or a mercantile agent

Input Service Distributor (ISD)

ISD is a unit which distributes the credit of input tax on services to its other units having different GSTINs

Online Information and database access or retrieval services

Every person supplying online information and database access or retrieval services from a place outside India to an un-registered taxable person in India For e.g., Netflix.

20

Registration Requirements Statewise registration (GSTIN) is required to be obtained. E.g. If A Ltd has branches in Maharashtra and Gujarat then A Ltd has to take separate registrations in each state. If a company has different business verticals in the same state it can opt to take different GSTIN for each vertical. It is not mandatory but optional to take seperate registration for different business verticals in a state.

Voluntary Registration One can opt for voluntary registration too. Let us understand the merits and demerits of taking voluntary registration. Merits 1. Business can avail input tax credit from their purchases 2. It creates more credibility for business (in terms of size of turnover) Demerits 1. Increase in cost of compliance 2. Maintaining additional records Person who are not required to take registration 1. Agriculturist in respect of supply of his agricultural produce; 2. Any person exclusively making supply of non-taxable or wholly exempted goods and/or services

21

Composition Scheme There is good amount of compliance in GST which can be time consuming and cumbersome especially for small businesses. Therefore, for simplifying compliance for small businesses, government has introduced composition scheme. Who can take? All registered taxable persons (except few categories) whose aggregate turnover in preceding financial year was less than Rs. 50,00,000/- are eligible to apply for the scheme. Few FAQs on Composition Scheme Question

Comments

Eligible

Ramesh has two units, one in Maharashtra which has turnover of Rs 30 Lacs and one in Gujarat which has turnover of Rs 25 Lacs.

Total turnover of all the units having same PAN has to be taken into consideration for determining eligibility. In the present case, total turnover is Rs. 55 Lacs hence Ramesh cannot avail benefit of composition scheme.

No

My total sales is Rs. 65 lacs, out of which sales of Rs. 30 lacs is exempt from GST.

Total turnover of all types of sales have to be taken into consideration for determining eligibility.

No

22

Composition Scheme Businesses not eligible for composition scheme 1. Service Providers except Small Restaurants (Turnover less than Rs. 50 Lacs). 2. Businesses dealing in both type of Goods, Non-Taxable Goods and Taxable Goods. 3. Businesses selling goods outside the state. 4. Businesses selling goods through E-Commerce Portal. The Scheme In composition scheme, a lump sum payment on the total turnover can be done by the business. The rate at which lump sum payment is to be done is mentioned below.

2%

1%

Advantages of the scheme: 1. It is simple to understand. 2. Business opting for the scheme has to file returns and make payments on quarterly basis. 3. Less records are required to be maintained as compared to a regular assessee. 4. It is more suitable for businesses that are making direct sales to consumers. Disadvantages of the scheme: 1. Business will have to pay lumpsum composition tax from its own pocket as GST cannot be charged in the invoice. 2. This will make the business less competitive in B2B (Business to Business) transactions because it cannot pass the input tax credit to the buyer. 3. Tax payable under reverse charge mechanism would still be payable.

23

What is Supply? In any indirect tax structure it is very important to precisely determine the “taxable event”. Taxable Event is a point or activity which triggers the levy of tax by the government. For instance, in present tax system • • •

Provision of service triggers service tax Manufacturing triggers excise duty Sale of goods triggers VAT

The taxable event under GST is the supply of goods or services. All taxes such as Central Excise, Service Tax and VAT/CST will be merged under GST, and therefore the concept of manufacture of goods, sale of goods and provision of services would no longer be relevant. Thus, for every business, it is crucial to understand the relevance of supply which sets the scope of transactions liable for the levy of GST. The term ‘supply’ includes all forms of supply of goods or services, undertaken for a price and for the purpose of business. It is worth noting that the supply should be for the purpose of business. Any transaction which does not form part of business activity will not be covered by provisions of GST. For E.g., selling of personal assets.

24

What is Supply? A. Supplies made for consideration (price): It covers all those transactions for which a “consideration” (price) is to be paid. If the price is not to be paid (for e.g.- free goods) then it will not be covered under definition of supply and no GST will be charged. However, thre are few specified transactions which will be taxable even if they are undertaken free of cost

Sale

Any transaction which leads to change in ownership.

Transfer

Any transfer between different states form a part of supply and are taxable. However, GST paid on branch transfers are fully available as Input Tax Credit.

Barter / Exchange

When the consideration is paid through goods instead of money. For example, a seller has supplied goods and the buyer, supplies goods to the extent of payment. Or when one product is exchanged with another product.

Licence

Any grant of license to use forms part of supply, For example: online subscriptions

Rental

Renting of property fully or partially is supply under GST

Lease

Letting out the building or property on lease is a supply under GST

Disposal

Disposal of business assets forms part of supply

25

What is Supply? B. Without Consideration: This part lists down specific transactions which will be covered under GST even if “no price” is paid for it. 1. Permanent Transfer/Disposal of business Assets In the event of sale or transfer of business assets i.e. capital goods on which Input Tax Credit was availed – the transaction shall be treated as supply even when these are cleared or transferred without consideration, and the business is liable to pay GST. Example: Prabhu Ltd. purchased 10 computers worth Rs.10,00,000/- and paid GST of Rs.1,80,000/-. Prabhu Ltd availed Input Tax Credit of Rs. 1,80,000/-. These computers were used for maintaining the records and accounts of the business. After years of usage, Prabhu Ltd. decided to give these computers away to the employees without any cost. Though the computers were disposed without any consideration, Prabhu Ltd. is liable to pay GST. 2. Between related parties and distinct persons for purpose of business Supply of goods or services between related persons, or between distinct persons when made in the course or furtherance of business Related person The definition of “Related Person” is similar to the current Customs Valuation Rules and is very wide. It has been purposely left out as it is not relevant for all readers. In case of any queries or further clarification you can reach the author at [email protected] or post your query on SahiGST.com Distinct Person Different GSTIN (units) of one tax-payer shall be considered as two distinct persons.

26

What is Supply? Each of its unit registration (unit with different GSTIN) and establishment will be treated as a Distinct Person, and any supply between them will be taxable. Therefore, any stock transfer or branch transfers are taxable. This is not the case in the present tax system. Presently, under Central Excise, a registered manufacturer making a stock transfer of excisable goods, has to pay excise duty on 110% of cost of production and under VAT, on furnishing Form F, stock transfers are not taxable. Value Added Tax

Exempt

Khan Enterprise (Head Office) Maharashtra

Form F

Khan Enterprise (Branch) Gujarat

Excise Duty Duty Payable on 110%

Khan Enterprise (Unit 1)

Khan Enterprise (Unit 2)

Under GST, levy of tax is on Supply which includes transfers and with the definition of distinct person, branches need to be treated as a different entity. Accordingly, any stock transfers are taxable in the following two cases: 1. Intra State Stock Transfer: Only when an entity has more than one registration in one state. 2. Inter State Stock transfer: Transfer between two entities located in different states is taxable.

27

What is Supply? Exempt

Khan Enterprise (Head Office) Maharashtra

Taxable if Branch 1 has Separate GSTIN

Khan Enterprise (Branch 1) Maharashtra

Taxable (IGST) Khan Enterprise (Branch 2) Karnataka

3. Principal to Agent/Agent to Principal Supply of goods under the following scenarios is considered as taxable supply even without consideration. • •

Supply by the principal to his agent: When the agent undertakes to supply goods on behalf of the principal. Supply by the agent to the principal: When the agent undertakes to receive such goods on behalf of the Principal.

Example Prabhu Ltd appoints Sharma Agency as an agent. They will store the spare parts supplied by Prabhu Ltd, and as and when an order is received by Prabhu Ltd from his dealers, instruction will be sent to Sharma Agency to supply the consignment. Also, Sharma Agency is entrusted to receive the supply of raw material from manufacturers on behalf of Prabhu Ltd. As per the example, • • •

Prabhu Ltd is the principal and Sharma Agency is the agent. Supply of spare parts by Prabhu Ltd to Sharma Agency is a taxable supply. The receipt of raw material by Sharma Agency on behalf of Prabhu Ltd and the subsequent supply by Sharma Agency to Prabhu Ltd is a taxable supply

4. Importation of service from related parties Services imported without consideration from related persons situated outside India will be subject to levy of GST if it is for purpose of business

28

What is Supply? C. Not a supply Here is a list of specific transactions which shall not be considered as supply and hence no GST is to be charged on them. 1. Services by an Employee to Employer 2. Services by any court/tribunal 3. The functions performed by the Members of Parliament, Members of State Legislature, Members of Panchayats, Members of Municipalities and Members of other local authorities, etc 4. Services by a foreign diplomatic mission located in India. 5. Services of funeral, burial, crematorium or mortuary including transportation of the deceased. 6. Specified activities performed by government. D. Mixed supply and composite supply Supplies which are bundled with two or more supplies of goods or services or combination of goods and services with distinct characteristics are classified as Mixed Supply and Composite Supply. Mixed supply The supply of two or more individual goods or services by a business, for a single price, is called Mixed Supply. In Mixed Supply, the combination of goods and/or services are not bundled due to natural necessities, and they can be supplied individually in the ordinary course of business.

+ Tie - 12%

+ Pen - 5%

+ Wallet - 12%

Watch - 18%

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Determining Mixed & Composite Supply Let us assume this kit is being sold for Rs. 4,500/-. As per the example, the supply of a tie does not naturally necessitate the supply of other elements (watch, wallet, pen) and vice versa. Hence, the supply of this kit is a mixed supply. Tax liability on mixed supply To calculate the tax liability on mixed supply, the tax rate applicable on the goods or services attracting the highest rate of tax, in the combination of goods and services, will be considered. Let us consider the example of the kit again. In this case, the watch attracts the highest rate of tax in the mixed supply i.e., 18%. Hence, the mixed supply will be taxed at 18%. Composite supply Composite Supply of goods and services is made by a taxable person to a recipient, and it comprises two or more supplies of goods or services, or a combination of goods and services, which are naturally bundled and supplied, in the ordinary course of business. The elements in a composite supply of goods and services are dependent elements on the ‘principal supply’ of goods or services. What is principal supply? The pre-dominant element in the supply of goods or services, forming part of composite supply, is principal supply, and any other dependent supply, forming part of composite supplies, are secondary to principal supply.

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Determining Mixed & Composite Supply Let us understand this with an example, A 5-star hotel in Mumbai provides a 4 days/3 nights package, with breakfast.

One Night Stay

Breakfast

This is a composite supply as the package of accommodation facilities and breakfast is natural combination in the ordinary course of business for a hotel. In this case, the hotel accommodation is the principal supply, and breakfast is secondary to the hotel accommodation. Tax liability of composite supply For purpose of calculating tax liability, the rate of tax applicable on the principal supply of such goods and services will be effected on the composite supply. Let us consider the same example, A 5-star hotel in Mumbai provides a 4 days/3 nights package with the breakfast. Let us assume, the hotel accommodation attracts 18% tax and the restaurant service attracts 12% tax. As per the example, hotel accommodation is the principal supply, and the entire supply will be taxed at 18%.

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GST & E-Commerce This section is relevant to businesses which supply goods through e-commerce platforms like Amazon, Flipkart, etc. In case, the reader is not dealing through e-commerce platforms he/she may choose to skip this chapter. E-Commerce in India 1. India is the second largest market place for e-commerce. 2. The e-commerce market in India is expected to breach the $100 billion mark by 2020. 3. E-commerce is still less than 2% of overall consumption in India, as against 14% in China. Above are few points out of many to give the reader an idea about the scale of e-commerce in our country. The emergence of technology has given rise to various creative business models and this has also resulted into multiple tax issues. Present Tax System Challenges in current tax regime for e-commerce. 1. Applicability of VAT Many disputes have arisen in case of e-commerce operators that undertake storage of goods on behalf of suppliers. VAT authorities claim that movement of goods from supplier to warehouse should be considered as sale and VAT/CST should be charged on such transactions. In fact, The Kerala state commercial department issued a demand notice to Flipkart on same issue. However, the demand was later rejected by Kerala High Court. 2. Entry Tax Some states such as Orissa, Uttarakhand, Mizoram, etc charge additional taxes to e-commerce companies for delivering products to customers in their state. This leads to increase in cost and reduces the speed of delivery which has been a major concern for e-commerce companies.

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GST & E-Commerce E-commerce Transactions in GST regime It was expected that GST will bring some respite to e-commerce sector when it comes to complexity of taxes. However, it seems that it just got more complex. 1. Mandatory Registration It is mandatory for all businesses making sales through an e-commerce operator to register under GST, irrespective of turnover. In a case where a business undertakes only non-taxable activities it does not have to register under GST even if it is making a supply through e-commerce operator. A question may arise, whether Consumer to Consumer (C2C) transactions done through platforms like OLX and Quickr will fall under the purview of above provisions? So, for example Vijay wants to sell his second hand TV through OLX will he have to register under GST? The answer is NO. As supply has to be for the purpose of business. As Vijay is not in the business of selling TVs he is not required to get registered. 2. GST to be charged by E-commerce platforms on specified services Government will be specifying category on services on which GST shall be collected and paid by E-commerce Operator and not the supplier. 3. TCS Provisions An e-commerce operator will have to collect tax @ 2% (rates are not finalized but it cannot be more than 2%) of net value of sales made through it if the payment is received by an E-commerce operator. All situations of supply of goods and services involving an e-commerce operator together with the applicability of TCS is tabulated hereunder: Type of Supply

TCS Provision

Sale of goods through an e-commerce operator

Yes

Sale of goods by an e-commerce operator as a agent

No

Provision of services specified by government

No

Provision of any other services through an e-commerce operator

Yes

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GST & E-Commerce Let us have a look at how payment shall flow in GST regime for E-Commerce Transactions Places order

Pays to Vendor after deducting 2% for GST

Customer

Amazon

Vendor

2% TCS

Government

Deposits the GST charged to customer (-) TCS deducted by Amazon

4. Relationship with E-commerce Operator One of the various E-commerce model is Managed Market Place (MMP) Model. Under MMP, fast moving goods are held on consignment basis by the e-commerce platform in their warehouses. These goods are delivered as and when they receive the order from the consumer. Idea of storing the goods at the warehouse of e-commerce platform is to facilitate fast delivery to the consumer. If you have used Amazon, you can see some products being marked as “Fulfilled by Amazon” and in case of Filpkart it is “F-Assured”. Here is how a typical MMP transaction takes place -

Places order

Customer

Amazon Deposits goods

Delivers goods

Warehouse

Vendor

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GST & E-Commerce Agency Model: When the E-commerce Operator is said to sell on behalf of the Vendor, one can say that it acts as an “Agent” of the Vendor. Warehouse as Additional Place of Business Model: Alternatively, the “seller” can declare the place where his goods are being warehoused as a “additional place of business”. Currently, E-commerce operators require sellers to disclose their warehouse as an “additional place of business” Let us have a look at both alternativesE-Commerce operator as an Agent

Warehouse

TCS Provisions will not apply

TCS Provisions will apply

The Transaction between: • Seller and E-Comm Operator • E-Comm Operator and Consumer Will be considered as two different transactions and GST will have to be charged on each transaction

The transaction between Seller and E-Commerce Operator will be considered as stock transfer and GST will be charged accordingly.

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Input Tax Credit Input Tax Credit is the backbone of the GST regime. This chapter explains important aspects for seamless flow of input tax credit. Utilization Of Credit Credits of

Utilised for

IGST

IGST, CGST, SGST

CGST

CGST, IGST

SGST

SGST, IGST

UTGST, IGST

UTGST

Eligibility criteria’s for claiming Input Tax Credit

Tax Invoice/ Debit note required

Return (GSTR-3) should be filed

Tax is paid by the supplier

Goods/Services should be received

All the above conditions are to be met. Input Tax credit will be provided on provisional basis on filing of return i.e. if the supplier has not made the payment then the Input Tax Credit of the purchaser will be reversed.

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Input Tax Credit 1. How should I claim Input Tax Credit if goods are received in installments but only one invoice is raised? If goods are received in installments against a single invoice, credit can be taken upon receipt of last installment of goods. 2. Can I take Input Tax Credit without making a payment to supplier? Yes. If you have received the invoice and goods/services you can take the credit. However, If you don’t make the payment to supplier within 180 days from date of invoice, the amount equal to input tax credit will have to be reversed. 3. Can I take Input Tax Credit on Capital goods? Yes. However, if you claim depreciation on the tax component of the cost of capital goods under the provisions of the Income Tax Act, 1961, the input tax credit will not be allowed. 4. What is the Time limit to avail input tax credit? It is earlier of • 20th October of next year • The Date of filing of the annual return (due date is 31st December of the succeeding financial year) Apportionment of Credit Input Tax Credit is available only for goods/services used for business and for supply of taxable goods/services. If that is not the case then only proportionate credit will be available.

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Input Tax Credit When goods on which ITC is to be taken is used for both business purpose and non business purposes, then ITC on the basis of use of Inputs When inputs are used for business as well as non business purposes input tax credit of only those inputs are available which are used for business purposes.

Use of Input Tax Credit

For Business Purposes

ITC Available

For Other Purposes

ITC Not Available

ITC on the Basis of use of objects Similarly, input tax credit is not available when inputs are used for non-taxable supplies, exempt supplies or nil rated supplies. Use of input tax credit: Partly for

Taxable Supplies

Zero-rated Supplies*

ITC Available

Non-taxable Supplies

Exempt Supplies

Nil-rated Supplies**

ITC Not Available

The manner of establishing such proportion particularly protecting directly attributable credits is not provided for but expected in a manner perhaps similar to the recently amended Rule 6 of Cenvat Credit Rules. *Zero rated supplies are those supplies on which ultimate tax incidence is zero. Exports & Deemed exports are zero rated supplies **Nil rated supplies are those supplies on which 0% tax is charged.

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Input Tax Credit ITC Not available There are certain transactions on which Input Tax Credit is not available. Here is the list of all those transactions. 1. ITC on Motor Vehicles ITC allowed only if one is in the business of • Transportation of Goods/Passengers • Trading of Motor Vehicles • Motor Driving Skills/Training

2. Restaurant Services Food & Beverages, Outdoor Catering, Beauty Treatment, Health Services, Costmetic & Plastic Surgery - ITC Allowed only if the receiver is in the same business 3. Life Insurance, Health Insurance and Rent a Cab to employees

ITC allowed only if • It is obligatory upon employer to provide to its employees • The receiver is in the same business

4. Membership of Club, Health and Fitness Centre, Travel Benefits to employees 5. Goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples What will happen to my present Input Tax Credit? Transitional provisions enable carry forward of unutilized input credit of Excise, Service Tax and the State level VAT into the GST regime. Input Credit of

Can be used for

CENVAT (Exise & Service)

CGST

VAT (under stock VAT)

SGST

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Returns in GST Compliance in GST is going to be quite challenging. Let us first have a broad overview of the various compliances under GST. 1. 11 different types of returns. 2. Monthly returns for all businesses (except composition dealers) irrespective of turnover. 3. Invoice Matching for Input Tax Credit. 4. At least 37 returns to be filed by all businesses (except composition dealers). 5. Purchase, sale and consolidated returns to be filed separately. 6. Returns once filed cannot be revised. 7. Any change shall be done only through amendment in future returns. Now, let us briefly review the different types of returns in GST GSTR1

Details of outward supplies/sales

GSTR2

Details of inward supplies/purchases

GSTR3

Monthly return on the basis of finalization of details of sales and purchases along with details of tax paymetns made

GSTR4

Quarterly Return for compounding taxable persons

GSTR5

Return for non-resident foreign taxable person

GSTR6

Input service distributor return

GSTR7

Return for authorities deducting tax at source

GSTR8

Details of supplies effected through e-commerce operator and the amount of tax collected

GSTR9

Annual Return (For Composition Scheme - GSTR 9A) and (For Audited Return - GSTR 9B)

GSTR 10

Final Return

GSTR 11

Details of inward supplies to be furnished by a person having UIN

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Who Files What and When Returns to be filed by regular assesee

Return GSTR 1 (Outward Supplies/ Sales) GSTR 2 (Inward Supplies/ Purchases) GSTR 3 (Final Return for the month)

GSTR 9/9B* (Annual Return)

Frequency

Monthly

Monthly

Monthly

Yearly

Due Date 10th of next month

15th of next month

20th of next month

31st December following the end of financial year

*GSTR 9B is the reconciliation statement to be filed by all those businesses who are required to get their accounts audited.

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Who Files What and When We know that there are three returns to be filed every month. We will walk you through how these returns will be filed with the help of SahiGST. We have taken a hypothetical scenario to understand this. Shankar purchased yarn and fabric from Parvati on 2nd August. Along with the goods, she also sends two tax invoices, one each for yarn and fabric. Parvati logs on to SahiGST on September 10 and uploads details of supplies made to Shankar using GSTR1 (GST Returns-1). The return will be filed with Goods and Service Tax Network(GSTN) Every business has to furnish the details of sales in GSTR-1 by the 10th of the subsequent month in which the sales takes place. What happens next is interesting. GSTN auto populates a new form (GSTR2A) with the information supplied by Parvati through GSTR1 and makes it visible to Shankar. By showing this information, GSTN cleverly wants Shankar to check if the tax invoices supplied by Parvati on August 2 match the details uploaded by Parvati on GSTN. Shankar will download GSTR 2A with the click of a button on SahiGST and upload purchase register as per his books of accounts. Shankar will reconcile GSTR 2A with his purchase register by using SahiGST. All mismatches between  GSTR 2A and purchase register will be available to him in minutes. If Parvati actually supplies more quantity but furnishes details of less at GSTN, she not only evades tax but Shankar gets lesser input credit than due. To rule out incorrect filing of details by Parvati, GSTN allows Shankar to make corrections. Looking at the information contained in the reconciliation report, Shankar discovers that Parvati has indeed forgotten to include the details of the invoice relating to the supply of yarn. Shankar is sure as he has a copy of the valid invoice sent by Parvati along with the goods. Shankar uploads the information giving details of missing invoice through the form GSTR2 by September 15. On September 16, GSTN allows (through auto-populated form GSTR1A) Parvati to see the details of missing invoices filed by Shankar (through the form GSTR2) on GSTN. GSTN allows Parvati two days to verify the missing invoice contents. She accepts the changes done by Shankar. Accordingly, tax is to be paid by both parties and GSTR-3 is to be filed before September 20.

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Who Files What and When 2

1

XLS XLS

GSTR-2A

GSTR-1

Parvati Files GSTR-1 by 10th of the following month

3

Shankar Downloads GSTR-2A between 11th to 15th of the following month

4

XLS

GSTR-1A

GSTR-2

Shankar reconciles GSTR-2A with books of accounts and files GSTR2 by 15th of the following month

5

Parvati gets the details of changes in GSTR-1A by 16th of the following month

6

XLS

DECLINED

Parvati accepts and amends in GSTR-1A by 17th of the following month

GSTR-3

Filing of GSTR-3 by 20th of the following month

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Who Files What and When Why so many returns and multiple filings? When we compare with present tax system, compliance in GST is definitely more demanding. For instance, return filing in service tax is half yearly, under state VAT laws frequency of filing returns is monthly, quarterly or half-yearly depending on the turnover of the business. However, in GST everyone is at par, irrespective of the nature of transaction and the turnover. Except those who have opted for composition scheme, all regular assessees have to file monthly returns. As input tax credit of a purchaser is largely dependent on the filings and payments done by suppliers, it is mandatory to ensure timely filings of monthly returns. How? All filings done by the purchaser will be cross-verified with the filings done by the supplier. Any mis-match will be communicated to both parties and if it remains unresolved the purchaser’s credit will be reversed. What if I have made the payment to the supplier but he fails to make the payment to the government? Here as well you lose stand to lose your input tax credit. Infact, one of the conditions for claiming input tax credit is that your supplier should have made the payment of tax to the government. In order to ensure that you are getting your due credit you must ensure that your supplier makes accurate filings. But how do I find out about the credibility of my suppliers? Government has envisaged this situation and they have introduced “GST Compliance Rating”. Every business will be rated on the basis of timeliness and accuracy of its returns. This rating will be available in public domain. A return once filed cannot be revised, so how can one rectify an error? Rectification can be done by amending an invoice in a future return. Let us continue the earlier illustration. We had seen that Parvati rectified her error by accepting the changes done by Shankar, but what if she had failed to do so?

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Who Files What and When 1

2 XLS XLS

GSTR-2A

GSTR-1

Parvati Files GSTR-1 By 10th of the following month

4

3

Shankar Downloads GSTR-2A Between 11th to 15th of the following month

5

Parvati gets the details of changes in GSTR-1A by 16th of the following month

7

GSTR-2

Shankar reconciles GSTR-2A with books of accounts and files GSTR2 by 15th of the following month

6 XLS

GSTR-1A

XLS

DECLINED

Parvati rejects the amends in GSTR-1A by 17th of the following month

GSTR-3

Filing of GSTR-3 by 20th of the following month

8 ITC-1

MISMATCH FOUND

Mismatch reflected in ITC-1

Parvati amends in GSTR-1 of the subsequent month

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Who Files What and When Now, let us have a look at returns to be filed by other class of dealers. Composition Dealer Return

Frequency

Due Date

GSTR 4

Quarterly

18th of succeeding quarter

GSTR 9A

Yearly

31st December following the end of financial year

Non Resident Foreign Taxable Person Return

Frequency

Due Date

GSTR 5

Monthly

20th of suceeding month or within 7 days from the last day of registration period

Regular Assessee + Input Service Distributor: Returns to be filed by regular assessee Return

Frequency

Due Date

GSTR 6

Monthly

13th of suceeding month

E-commerce OperatorReturns to be filed by regular assessee Return

Frequency

Due Date

GSTR 8

Monthly

10th of succeeding month

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Non-filing of GST Returns on time? Late Fee Return

Due Date

GSTR 1 (Outward Supplies) GSTR 2 (Inward Supplies) GSTR 3 (Monthly returns) GSTR 4 (Composition) GSTR 5 (Non Resident) GSTR 6 (ISD) GSTR 7 (TDS) GSTR 8 (TCS- E-commerce Platforms) GSTR 10 (Final Return)

Rs. 100 per day of delay upto maximum of Rs. 5000/-

GSTR 9/9A/9B (Annual Return)

Rs. 100 per day of delay Maximum = 0.25% of turnover in his state or union territory

Penalty - May extend upto Rs. 25,000/Late fees is mandatorily levied on late filing of return. However, penalty is imposed on case to case basis and can be waived off. Further, if the business fails to file returns for 6 months its registration will get cancelled. Composition dealer’s registration will get cancelled if the dealer fails to file returns for 3 tax periods. Payment of late fees is just a financial impact of non filing of return.However, there are other major impact which are also to be taken into account. 1. Adverse Impact on GST Compliance rating Going forward GST compliance rating is going to be a benchmark for establishing credibility of the vendors. As input tax credit is dependent on filings and payments of suppliers, businesses will not prefer to do transactions with vendors with poor GST compliance rating. 2. Inconvenience to purchasers If a supplier fails to file GSTR 1 by 10th of the succeeding month he cannot file the same even between 11th to 15th. Non compliance by sellers will cause lot of inconvenience to purchasers impacting the credibility of the seller. 3. Returns of succeeding month Return of succeeding month cannot be filed until and unless returns of previous period are filed.

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Reverse Charge Mechanism The Concept Presently the concept of reverse charge mechanism(RCM) is prevalent in service tax. There are few services which are specified on which service tax is to be paid on reverse charge. Generally, service tax is charged by the provider in his invoice. The same is paid by the receiver of service to the provider of service. The provider of service will pay the service tax to government. This is also known as forward charge. In reverse charge, service tax is not charged by the provider in his invoice. Over here, the service receiver will have to himself calculate the amount to be payable as service tax and pay to the government directly. Reverse Charge in GST Now under GST, a similar concept is being introduced but with a twist. RCM will be applicable not only for services but also for goods. Government will be bringing out a list of services and goods on which reverse charge mechanism is to be applicable. However, apart from that there is a specific provision in the act which states that if you are a registered person then, any taxable purchase that you make or taxable service that you take from an unregistered person reverse charge mechanism will be applicable. In such cases, it is the responsibility of the purchaser to create an invoice and pay the tax on it. There are far reaching effects of this provision 1. There will be an increased compliance on purchase from an unregistered dealer. 2. Fake purchase and booking fake expense at the end of the year will be discouraged as the dealer will have to pay GST on it. 3. Difference between expenditure as per books and as per returns will be captured in annual return and tax on any difference will have to be paid along with interest.

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How to get GST Ready? With the background of GST well understood, we can now enable you to be GST Ready. Understanding compliance requirements: First step towards GST will be to understand the compliances which the business needs to adhere to. Businesses will have to determine how many GSTIN registrations (refer registration chapter) their operations would need, which filings would be applicable to them along with their frequency and what channels to keep tab of for regular GST related updates. Setting up processes in order to ensure compliance: Compliance in GST is very critical, primary reason for the same is that filings done by supplier will be cross verified with filings done by purchaser. Further, input tax credit (tax set off) of the purchaser is dependent on the filings done by supplier. The matching of invoices and reversal of input tax credit will be automated by GSTN (GST Network). This calls for setting up of very strong internal control systems along with appropriate standard operating procedures in order to ensure accurate and timely filings of returns. Government is expecting that taxpayers would leverage technology to run their business like never before! Training your staff and vendors for GST requirements: There are several easy ebooks, free & paid training modules and regular events conducted in every city. It is highly advised that accounting & finance staff within businesses should start attending these sessions as early as possible. Given that delayed or erroneous filings by your vendors can affect your Input Tax Credits, it is advised to keep in sync with them on their preparedness for GST. Getting the right compliance software: Finding the right compliance software will be the most critical activity that your organization will have to do. Software which is scalable, easy to use and the one which can do effective reconciliation of mis-matches shall be the right choice for the business. Most businesses would need two kinds of softwares for their GST needs, a GST compliant accounting software (eg: Tally) and a good GST returns filing and reconciliation software (eg: SahiGST). Aligning with your tax filing professionals: In an independent survey it was seen that 22% of serious businesses do their indirect tax filings themselves. Leaving about 78% businesses to rely totally on CAs & other professional tax filers.

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How to get GST Ready? As compliance in GST increases, scope of work of your Chartered Accountant will also increase. Business will have to revisit their decision to have in house accounting/processing of returns vs outsourcing it to a Chartered Accountant. Proper cost benefit analysis will have to be done before arriving at the decision. Businesses that choose to do their filing themselves would need a strong domain backup from their CA to make sure they are compliant. And the ones choosing to outsource their work to a CA or tax professional would need to ensure that they are well aligned in terms of sharing data, managing reconciliations and keeping tab on input tax credits.

GST - Good or Bad? GST is a compliance driven law which requires businesses to be disciplined, accurate and compliant. These are things which small businesses have always tried to dodge especially when it comes to compliance. The fact that there are 3 returns to be filed every month terrifies the entrepreneur. Every time I share about this fact, there is always a similar reply “Main mera business karu ki pura mahina compliance hi karta rahu???” Inspite of so many compliances when we see the larger picture, GST is here for good. If the business is honest in its transactions and regular in its filings there is no need to worry about anything. Compliance looks challenging but the kind of technology that we have today, things are going to be largely automated. SAP has been very proactive and its clients are almost ready for GST whereas SMEs can bank on software providers like SahiGST. For businesses who want to outsource processing of returns, CA community is ready to serve. The fact that credit of tax paid to a supplier in Kerala can be used to pay the tax in Haryana, in itself is a very unique and beautiful concept It is always difficult to adapt to new things. However it is rightly said that change is the only thing which is constant. Let us embrace the change. It might require us to stretch a bit but if things turn out the way they are suppose to it will bring a huge change in the way business is done in our country.

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Why GST for Entrepreneurs? Goods and Service Tax (GST) is the single largest reform when it comes to taxation in the history of our country.

GST has far reaching effects on your business. Whether you are a manufacturer,

trader or a service provider, one needs to be vigilant and accustomed to basics of GST to avoid any compliance breakdowns in your organisation.

"GST for Entrepreneurs" has been created with the intention of simplifying the complex GST Law for you.

The focus of this book is not to discuss nitty-gritty of the law but to throw light on aspects of GST Law which impacts your organisation.

Rs. 199/-