Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 6-3-2017 – Invoicing A registered taxable person supplying taxable services shall, before or after the provision of service but within a period prescribed in this behalf, issue a tax invoice, showing the description, value, the tax payable thereon and such other particulars as may be prescribed. In case of traders or retailers, a memo or bill shall constitute invoice. A registered taxable person shall, on receipt of advance payment with respect to any supply of goods or services by him, issue a receipt voucher or any other document, including therein such particulars as may be prescribed, evidencing receipt of such payment. Returns Under existing tax law, assessee is required to submit two half-yearly returns under service tax, monthly /quarterly return under excise and quarterly returns under VAT laws in a year. Model GST law (version-II) provides for the following returns which are required to be filed by the register
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e required Information Technology support to this sector and as such, there lies a good opportunity for software industry from small businesses and retail trade. GSTN has appointed over 30 GST Suvidha Providers (GSPs) who will be the conduit or interface between the taxpayer and the GST network (GSTN). Small business can avail the services of GSPs to comply with the GST requirements including invoking / return filing etc. Rate of Tax Under GST law, GST Council has proposed four-tier rate structures, i.e., 5%, 12%, 18% and 28%. However, no abatements have been prescribed yet. Therefore, prima facie, it appears that small traders/retailers would need to pay GST at the rate as may be prescribed for the supply of goods and/or services. However, there will be exemption rate (nil) and zero rate for exports. A special rate for gems & jewellery may also be prescribed. A compensation cess is also proposed on demerit / sin goods. Blockage of Working Capital In case traders supply goods or se
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. Most of the forms used in VAT and CST will be withdrawn. On the fillip side, GST may impact small businesses / traders negatively owing to following – Rate of GST may be higher for certain goods / services Most of the exemptions / concessions may be withdrawn or rationalised Stock transfers, unlike present, shall be made liable to GST Return compliances will substantiality increase Job works may be made taxable where as presently, they are exempt against prescribed form. Administrative Control over Small Assessees The States and the Centre have decided on sharing administrative powers wherein taxpayers with an annual revenue of less than ₹ 1.5 crore will be divided between both sides in the ratio 90:10. However, the division will be done in this ratio across four slabs to ensure that the division is uniform – below ₹ 20 lakh, ₹ 20 lakh to ₹ 50 lakh, ₹ 50 lakh to ₹ 1 crore and ₹ 1 crore to ₹ 1.5 crore. Those taxpayers above the ₹ 1
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ating that there will be around 8 million taxpayers under GST initially. Most of the Service Tax assessees are in the range of ₹ 20 lakh to ₹ 1.5 crore and the CBEC will now administer only 10% of them. Way Forward With the implementation of GST, which is likely to be done by July, 2017 now, small traders and retailers will be benefitted as the implementation means a seamless integration of goods and service transaction across the states. It will have benefit at different stages of the value chain. For the procurement of raw materials, movement of goods would become less cumbersome, which opens gates for more suppliers /vendors to merge. Following this, a wider base of distributors would be available as state boundary paperwork will not be a hurdle, resulting to better access and low transportation costs. A favorable environment for a supply chain will help reduce in-transit inventory and further lower the working capital requirement. Simplified taxes and availability of in
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tiate optimal pricing that would lead to incremental savings. Though with the proposed structure of GST, dealing with multiple authorities implementing the law will be challenge for companies. Companies will have to think of procurement in a granular way. Right from third-party contracts to understanding supplier's cost structures to where he will get credits, each aspects will have to be studied minutely. And that would require a deep dive into even vendor supply chains, something that wasn't required till now. Given the prescribed tax credit process, a transition to GST would also required ability to handle a huge amount of transactional level data. To manage that, vendors will have to be trained on how his systems capture the transactions and how tax credits are processed in his system to ensure proper transferability of credits. Leading companies will invest in vendor education and hand-holding programs, to ensure that their entire supply-chain transitions to a GST regime s
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e food wastage and bring down prices. It will not only bring relief to the consumers, but also help retail sector by building supply-chain efficiencies in India in a big way. This is thus going to be a win-win legislative reform for all. The threshold limit of ₹ 10 lakh or 20 lakh will protect the small businesses. The VAT limit currently varies from State to State, limit is currently at ₹ 10 lakh, for Uttar Pradesh it is at ₹ 5 lakh and it is only ₹ 1 lakh in North-Eastern States. There is wide variation among States on current VAT threshold. GST Council decided at ₹ 20 lakh threshold which means any dealer who has turnover of less than ₹ 20 lakh will not be part of tax net. This gives huge relief to small businesses in India. However, companies and business / retailers may face challenges in terms of inventory planning, logistics, budgeting, cash and working capital requirements while transiting to the GST regime. Whether the dealers will have to h
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