Goods and Services Tax - GST

What is GST?

Goods and Services Tax is the new unified, multi-stage and consumption based tax levied on manufacture, sale and consumption of Goods and Services at national level to replace all the existing national and state tax systems like VAT, Service Tax, Excise Duty, etc. It is expected to remove the cascading effect of tax-on-tax which is prevalent presently. It is applicable to you if you are into Manufacturing, Trade, E-commerce or Services.

What are the Benefits of Goods & Services Tax?

• Cascading tax effect (meaning tax on tax) will no longer exist 
• Input Tax Credit will be easier to avail 
• Returns and compliances will be consolidated 
• Increased efficiency in Logistics 
• Subsumes variety of Indirect Taxes
• Higher threshold for Registration
• Composition scheme for smaller businesses 
• Online simpler procedure 
• Regulating the unorganised sector

Can I have multiple Registrations?

Yes. A person with multiple business verticals in a state may obtain a separate registration for each business vertical (in each state).

Is Input Tax Credit available under GST?

Input credit means at the time of paying tax on output, you can reduce the tax you have already paid on inputs. One of the fundamental features of Goods & Services Tax is the seamless flow of input credit across the chain (from the manufacture of goods till it is consumed) and across the country.

What is GST Compliance Rating?

GST Compliance Rating is a numerical rating given to businesses depending on their level of compliance with Goods & Services Tax rules. Refund claims under the GST regime will also be processed on merit basis, i.e on the GST compliance rating of the registered taxpayer. It is expected that certain slab rates will be maintained for various taxpayers falling under various bandwidths of compliance rating and the refunds will be made in terms of percentage amount based on the individual rating of the taxpayer. Higher compliance ratings will make the refunds process easier for businesses.

Which all taxes will GST replace?

It will replace all the taxes currently levied and collected by the Centre (such as Central Excise Duty and CVD) and by the State (such as VAT and CST), on businesses.

How to Enroll for GST?

You can enroll for GST via the common portal of Goods & Services Tax. Marg Master Partner can also help you with your enrollment. For more details click here.

How many Returns are required to be filed under GST?

A normal taxpayer will be required to furnish three returns monthly and one annual return. Similarly, there are separate returns for a taxpayer registered under the composition scheme, taxpayer registered as an Input Service Distributor, a person liable to deduct or collect the tax (TDS/TCS)

What is Composition Scheme?

Small businesses and taxpayers having a turnover less than Rs. 50 lakhs can opt for Composition scheme where they will be taxed at a nominal rate of 0.5% or 1% (for manufacturers) CGST and SGST each (rates as per the latest proposed changes in the Goods and Services Tax bills). Composition levy is available to only small businesses dealing in goods. It is not available to interstate sellers, e-commerce traders and operators, and service providers.

What is HSN Code?

The Harmonized Commodity Description and Coding System generally referred to as “Harmonized System of Nomenclature” or simply “HSN” is a multipurpose international product nomenclature developed by the World Customs Organization. It comprises about 5,000 commodity groups; each identified by a six digit code, arranged in a legal and logical structure and is supported by well-defined rules to achieve uniform classification. Without HSN, the system will not be able to pick tax rate for goods declared at the time of registration.

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Easing the changes of GST with CA Professionals

GST is a welcome change for CA professionals and will have additional roles for CAs across the nation.The GST comes up with a responsibility to perform and asks for an in-depth taxation study for almost all types of industries.This biggest reform promises to bring a big change in the existing indirect taxes leading CAs to perform as a facilitator between the policy makers, industry, trade organization and the consumers.

After GST implementation all the indirect taxes as mentioned would be clubbed into one single tax. Though the rates of taxes is not yet finalized for each industries but still it is clear that there would be four different slabs of taxation ranging from 5% to 28%, therefore a huge change is expected in the balance sheet of all types of industries.

The CAs are believed to serve all the industries who go for taxation filing at the end of every financial year and to manage the finances of the companies throughout the year. They are responsible for serving every industry in managing their financial details and taxation procedure to outperform and grow up as a big brand.

Estimated growth with GST

GST is a huge challenge and opportunity for the Chartered Accountants and they need to get ready for enabling this change in a smooth and seamless manner. With GST implementation the country is expected to see a gain of $15 -$20 billion in a years time which would promote exports, raise employment, boost growth and ease the business procedure.

The present stats as suggested by National council of Applied Economic research has estimated a boost in GDP which is expected to be around 2%.

The GST is expected to add 20 million new registration or users in the GST regime. Moreover, all the VAT work which was done manually will be carried out online as the new GST is totally governed on an online supported portal.

GST adding more roles to Chartered accountant

Most of the companies have separate teams of procurement, distribution marketing, accounting taxation and so on will need their CAs to map the entire supply chain pattern of the company and various taxes paid at each leg thereafter.

Experienced Chartered accountant in demand

The implementation of GST would definitely result in widening of tax bases, differing rates of taxing goods and in such a scenario CAs with their knowledge on manufacturing, costing and pricing will be best suited to assist the industry.

Experienced CAs would be in great demand who could forsee the problem before the industry could see it. CAs would be required to make changes in the existing transactional methodology to minimize taxation and hence would require services of professionals for this.

Transformation of manual taxation procedure to online registration

There would be more complexity as expected because many businessmen or SMEs who were doing their taxation work manually would now need to register online and should have the best taxation professional with

Does your Accounting Software have features to withstand Cyber Attack?

With the implementation of GST around 3 to 5 crore new businesses are expected to get added to the new tax regime. Moreover, there are 80 lakhs taxpayers who are already registered with the present taxation system and will be migrating into GST. The provisions of the new tax law are such that it has become almost impossible to work without the adoption of digital technology and proper accounting software.

Besides the merits of Digital technology, there are even demerits termed as a cyber attack. Therefore, any business organization which is going to buy an accounting software should go for such a software which not only solves his taxation problem but also provides world class cyber security features.

The recent news of cyber attack across the world has made the situation a bit tensed out. Ransomware, a dreadful malware is a major concern for many countries as it is targeting the software of all the companies whether it’s an MNC or SME or individuals.

Before proceeding further let’s be aware of Ransomware, it’s a technique used by hackers that lock user’s file and to get it unlocked they need to pay the attackers in the form of Bitcoin an cryptocurrency and a digital payment system.

The multinational cyber security team has said that these attacks is seen encrypted with the extension “WCRY” and could be noticed as infected filenames. In India too the cyber security agency ( CERT-IN) has issued a red alert with the Wanna Cry attack.

A recent report shows that the ransomware has already jeopardized the computers in the Britain’s hospital network, Germany’s national railway and other companies and government agencies worldwide.

The cyber attack after hitting dozens of countries on Friday 12th of May 2017 has reported hitting more than 29000 institutions in China this morning. The attack is one of the biggest attack ever recorded, disrupting computers that run factories, banks, government agencies and transport systems.

Cybersecurity researchers are already working day and night to find a solution for the biggest cyber attack and for the time being have all the governments of different nations have advised people on how to protect against the dreadful attack of Ransomeware.

Therefore SMEs and MSMEs going for accounting software to mange their accounting after implemenation of GSTshould opt for such acounting software which provides worlds class security features against threat of cyber attack

Anti Profiteering under GST

We are in the last leg or the final round of GST and the four goods and services tax (GST) supplementary bills finally got the green signal on Wednesday. Under the current regime, input tax credit is available only on inputs but in present GST the concept of input credit tax is broadened

In the present taxation regime the input VAT paid on purchase of goods is available as credit only on making a taxable sale whereas any tax paid on business overheads is not allowed as credit.

But with the GST which is a destination based tax and one which abolishes the cascading effects in the present tax structure there is also an increased credit opportunities to be availed thereby providing improved profit levels at every stage of supply chain.

To put a check on such improved profit levels we need to pass on the benefit of input credit or tax reduction to the end consumer by way of a commensurate reduction in prices also called Anti- profiteering clause.

The anti-profiteering clause is one of the major aspect which was discussed in the seven hour long debate on Wednesday 18th of may by the Finance Minister Arun Jaitely. With this move the government has also assured protection for the consumers from inflation after GST implementation.

The implementation of GST has often led to some inflationary pressures in countries where this tax is already in place so to put a check on such inflationary pressure Anti profiteering clause would definitely be helpful.

The government will calculate the anti profiteering fact by asking companies for pre- and post-GST cost sheet of each product and calculate the pre-GST tax rate and post-GST tax rate for each and every item. This will help them to understand the exact level of tax benefit which a supplier should get.

Though there is still or no clarity on the fact how will they calculate the profit of an organization made and how minutely will they be monitoring businesses to understand whether benefits have been passed on to consumers in India.

But while the objective may sound simple, implementing an anti-profiteering clause is fraught with grave risks.

With all the tax structure in place and items given their respective slab which they fall in, the biggest challenge is that of Anti Profiteering compliance and Which authority will track all these aspects and conclude whether the prices should be passed on or not.