Over the past 50 days, the transformative GST (goods & services tax) has evolved at a very fast pace. Once the rollout became a certainty, the government and stakeholders have moved in fast to tweak rules, revise taxes and introduce new features in a bid to progress on the stated motto of making India a unified market.
Successive GST Council meetings, interactions with taxpayers and on-ground feedback have enabled smooth functioning of this new tax system that is young and still learning.
Over 71.30 lakh excise, service tax and VAT payers have migrated to the GSTN portal and over 15 lakh new assessees have registered on the platform.
Let’s look at the lessons from the past 50 days and understand the way forward.
While legislative provisions were framed before July 1, 2017, many of the practical solutions have been announced later. From the date of filing first GST returns, to dealing with trends like deregistration of brands post-GST to avoid taxes, to hike in luxury car cess, to changes in invoice rules – various enabling and implementation procedures and clarifications are being introduced along with the onset of GST.
Here is a brief assortment of important developments in the past 50 days:
• The government has notified the timeline for furnishing final tax returns for July and August under the GST regime. The GST Council had in June allowed businesses extended timeline for filing final GST returns in forms GSTR-1, GSTR-2 and GSTR-3 for July and August. In the interim period, businesses have to file GSTR-3B which is a summary of self-assessed tax liabilities with consolidated details of outward supplies and input credit.
• The GST Council in its 20th meeting decided to reduce the tax rate for job work for the entire value chain of textiles sector to 5 per cent. Alongside, it lowered rate for tractor parts to 18 per cent from 28 per cent. Also, the Council gave the in-principle nod to the e-way bill rules.
• The GST Council will soon start publishing rates of various products to prod companies to pass on gains, including those from input tax credit. To begin with, 150 items will be taken up. Once the rates of 150 items have been released, more items could be added later.
• The GST Council in its first review meeting since the implementation of India’s biggest tax reform since independence hiked the fixed cess on cigarettes by Rs 485-792 per 1,000 sticks, depending on the length of the stick. This is in addition to the 5% ad valorem cess which continues. The government has fixed a peak GST rate of 28% on cigarettes, with the cess being levied on top of the tax.
Dynamic approach required
The quick and evolving nature of GST tax system has kept assessees on their toes for monitoring regular updates on various aspects with respect to GST. Hence, tax payers, be it trading houses to large global corporations, will be best-placed if they have a single window solution.
The approach needs to be a proactive one since the old way of reacting to changes slows down the compliance and may lead to temporary business disruptions. As the GST regime evolves, businesses that are open to new changes, and modifications around rates, processes and systems will ultimately be able to come out with flying colours.
With a deluge of tax-content and developments, a calculation-to-compliance approach enabled by technology will be necessary to accurately calculate GST based on the place of supply rules for the sale and acquisition of goods and services.
Given that transactions may be for intrastate, interstate, import, export, and stock transfer, it is important that the right logic be applied to enable CGST, SGST, and IGST calculations for domestic sales and purchases as well as imports and exports. Businesses will also need support for the Goods and Service Tax compensation fund cess on luxury and sin tax items.
Finally, perfect integration with the GSTN, supporting notifications, signatures and required validations are as important as automation of the import of data from existing ERP systems. Only a seamless and systematic approach, driven by technology and practical sense, can help a business furnish three returns a month and one annual return.
Source : The Economic Times