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What to Expect from GST There are just a few weeks remaining for you to get prepared for the roll out of GST, and out of the many questions you will be asking yourself, ‘what changes should I look for in my system, from my Tax Consultant, or in business processes, in order to better prepare for GST?’, is likely to be at the top of the list. This article attempts to highlight key expectations and new pain points that are going to emerge in your business due to the upcoming law. These findings surfaced once we refocused our efforts after the constitutional amendment leading up to the GST law. All our work went into identifying new business behaviour changes in order to deliver the simplest-to-use GST solution in the market. As you already know, GST is based on the concept of invoice matching and it will fundamentally change the behaviour of your business in the following ways: 1. We believe that you will move to a ‘Payment on Invoice Upload’ behaviour In the pre-GST era; you were able to complete a transaction after receiving an Invoice and making the due payment to your Supplier. You could also take for granted the ability to avail tax credit on the invoice, even before filing your tax returns. Now with the GST rules, tax credit is assured only after invoice matching is done. The question to ask yourself- how will you bring your confidence that Tax credit is not rejected or it is reflecting incorrect value. So, this is how we see the process going. First, an invoice will be uploaded to the GST system by your supplier. You will then proceed to check whether all the data in the invoice is correct and matching your records (once the invoice is made available to you). You are likely to make the payment to your supplier only once this has been verified. This way of working may start for a few suppliers to begin with but would become a normal process for all of your suppliers. Your customers would also expect you to upload the relevant sales invoices before paying you. Therefore, we believe that ‘Payment on Invoice Upload’ will become a common phenomenon. 'Payment on Invoice Upload’ will become a common phenomenon under GST. CLICK TO TWEET 2. You will interact on a much more regular basis with the Government Tax System In the pre-GST era, interaction with the government tax system was a once-in-a-month or once in a quarter phenomenon for most businesses. However, the ‘Payment on Invoice Upload’ behaviour in GST will make this interaction more frequent than ever before. It begins with an invoice being uploaded either by you, your Goods and Services Tax Practitioner (GSTP), or both of you. And in the case where both of you upload, data needs to be efficiently managed rather than being the source of confusion. You will also start accepting invoices for your purchases and would want a real time status of invoices before paying your supplier. Given all of this, you should prepare to engage more frequently with the Government Tax System. Prepare to engage more frequently with the Government Tax System under GST. 3. You will notice a high level of anxiety during the cut-off dates In the pre-GST era, there was only one cut-off date for the return filing of a Tax type. You would have provided information to your GSTP who prepares and uploads the returns, pay the due taxes, and provide you with the acknowledgements. Now, the process of upload, matching, missed uploads and tax payment have different cut-off dates, namely the 10th, 15th, 17th and 20th. And on each of these dates, anxiety levels are likely to rise depending on whether your returns are successfully processed or not. This is because each of us will have hundreds, thousands or even Lakhs of Invoices in a month and the GST system put together will have several billions of invoices to process in a given month. Given that this system is expected to both store and provide information, it will require time to process such a high volume of data and provide results of success or failure based on the GST rules. To design such a solution requires a two-step process; the first step is to receive data for processing from the taxpayer and the second step is to provide results for the received data (also known as asynchronous behaviour). An analogy to simplify this would be depositing a cheque in a bank account and getting a message that the amount is credited but is subject to clearing. Whether the clearance is successful or not is known to you at a later point in time. This asynchronous behaviour means that just by uploading information to the GST system does not complete your compliance activity. Anxiety levels will peak towards the 4 cut-off dates as the processing time could take longer. You will expect to be informed about any failures or successes, and you should be informed even if you have closed your system. 4. You will need a system that seamlessly operates out of multiple locations Almost all businesses operate from multiple locations. It starts with a minimum of two locations; your businesses location and your GSTP’s location. If your business is operating from multiple locations, the operational complexity further increases. You would be expected to upload a few of the Invoices and invoice matching from each of your locations. Your GSTP will take information from you for and the data from GSTN for already uploaded invoices. Based on this collected information, your GSTP will submit the returns. It is very likely that all of this is simultaneously operated. Simultaneous operations from multiple locations would need an extremely high degree of integrity & accuracy in Compliance data. Therefore, your ability to seamlessly operate with multiple disparate systems is extremely crucial to ensuring your books and compliance returns match. 5. You will need a system that aids confidence in signing returns The last step of return filing requires you to download the summary (which doesn’t contain individual transactions) and sign a return. Before you sign, it will be crucial to ensure that nothing is pending and that there is no difference between what you have submitted and what GSTN has sent to you – this will be a challenge. It is important to be aware that you, your suppliers and your customers could all update relevant sections of information that go in your return. Since the GSTN system is asynchronous, the summation might be in processing, therefore some information won’t be available in summary immediately. You need to reconcile all the above information together in a system in order to build confidence in signing returns. 6. You need Compliance Convenience to remain focused on running the business These pain points are likely to cause a lot of confusion in your business. In fact, if not managed well, it can keep you busy for a significant period of time and potentially even distract you from running your business. You would desire to have “One Simple Transparent Step” to accomplish all the pending activities related to the GST system. And bringing this Compliance Convenience would be Tally’s objective, so that your focus remains in running the Business and it being GST Compliant.
For the implementation of GST from July, 2017 , Draft law of GST compensation has been approved by the GST council in 10th meeting. Now, three crucial draft laws — Central GST (CGST), Integrated GST (IGST) and State GST (SGST) expected to be approved in the next meeting held on 4 and 5 march. GST will impact on each and every industry & business in India. In Education and Training Industry, India holds an important place in the global education industry. The country has more than 1.4 million schools with over 227 million students enrolled and more than 36, 000 higher education institutes. India has one of the largest higher education systems in the world. However, there is still a lot of potential for further development in the education system. India has become the second largest market for e-learning after the US. In the Education and Training Industry will also be impacted by GST and impact is elaborate in the following aspects:- Tax Payment Registration Input Tax Credit Returns Refund Tax Payment: In the existing indirect tax structureeducation and training industry enjoy various tax exemptions and tax benefits. Education services provided by an educational institution (i.e. institution providing services of pre-school education and education up to higher secondary school not coaching instituteOR education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in forceOR education as a part of an approved vocational education courseto its students, faculty and staff. In addition of above, Following Services provided to an educational institution(i.e. institution providing services of pre-school education and education up to higher secondary school not coaching institute OR institution providing services of education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force OR institution providing services of education as a part of an approved vocational education course)— (i)Transportation of students, faculty and staff; (ii) Catering, including any mid-day meals scheme sponsored by the Government; (iii) Security or cleaning or house-keeping services performed in such institution; (iv) Services relating to admission to, or conduct of examination by such institution. » Following Services provided by the Indian Institutes of Management to their students as per the guidelines of the Central Government:- 2 years full time residential Post Graduate Programme in Management for the Post Graduate Diploma in Management, to which admissions are made on the basis of Common Admission Test (CAT), conducted by Indian Institute of Management Fellow programme in Management 5 year integrated programme in Management. » Services of National Skill Development Programme implemented by the National Skill Development Corporation (NSDC)OR A vocational skill development course under the National Skill Certification and Monetary Reward Scheme ORAny other Scheme implemented by the National Skill Development Corporation by the following:- National Skill Development Corporation set up by the Government of India Sector Skill Council(SSC) approved by the NSDC Assessment agency approved by the SSC or NSDC A training partner approved by the SSC or NSDC. » Services of skill or vocational training courses certified by National Council For Vocational Training provided by training providers i.e. Project implementation agencies under Deen Dayal Upadhyaya Grameen Kaushalya Yojana under the Ministry of Rural Development. » Services of training or coaching in recreational activities relating to arts, culture or sports. Any education and training service except aforesaid education and training services are liable of Service Tax @15%. In the GST Law, It is expected that any education and training service except exempted in existing tax system will of GST @18% then the price will up by 3%. But the input Tax credit will be allowed on the input goods which was not available in existing tax system resulting some relaxation to the education and training service provider. And it is expected that exempted services in the existing tax system will continue to remain exempt as exempt supply in GST law. 2. Registration: In the existing tax system, Centralized registration facility is available for the taxpayer who provides education and training services from more than one premise. Such premises may be located in the same state or in different states. In the GST Law, State wise registration is mandatory i.e. If any institution supply services from more than one premises located in different states then registration in every state from where services supplied is mandatory. For Example: – ABC smart classes having 20 offices in India and each office is located in different state and provide services and head office is situated in New Delhi. In present tax system, Centralized registration facility may be availed by the ABC smart classes however in the GST law, Registration in all 20 states is mandatory for ABC smart classes. Migration of Existing Taxpayers into GST has been started from 08th Nov 2016. In the migration, taxpayers can log in to GST Portal i.e. to fill the required fields and submit scanned documents. Input Tax Credit: In the existing tax structure, education and training services are provided by the various institution and they procure various goods and services for providing education and training services. Service provider avail the credit of service tax paid on input services however can not avail the credit of input tax on procured goods for providing services. In the GST law, institution which will provide education and training services can avail the credit of CGST+SGST or IGST (as the case may be) paid on input goods and services procured for providing education and training services in the following manner: Cross utilization of CGST and SGST will not be permitted i.e. for the payment of SGST, input of CGST is not available and vice-a-versa. For the payment of CGST, first input of CGST to be used then input IGST to be used. For the payment of SGST, first input of SGST to be used then input IGST to be used. For the payment of IGST, first input of IGST to be used then input CGST and then input of SGST to be used. Returns: In the existing tax structure, Education and Training service provider are required to file the following returns:- Half Yearly Service Tax return. Annual Service Tax return. In the GST law, institution which will provide education and training services are required to file the following returns:- Return Particulars Due Date Applicable For Form GSTR-1 Outward Supplies 10thdayof next month Normal tax payer GSTR-2 Inward Supplies 15thdayof next month Normal Taxpayer GSTR-3 Monthly return 20thdayof next month Normal Taxpayer GSTR-8 Annual return 31st Dec of the next FY Normal Taxpayer GSTR-4 Quarterly Return 18th day of next month qtr. Compounding Taxpayer GSTR-5 Return by Non Resident Taxpayer Ø If registration period is less than month -within 7 days after the date of expiry of registration. Ø If registration period is more than one month then to be furnished on monthly basis -20thday of next month. Non Resident Taxpayer In addition of above returns, GSTR- 6 and GSTR- 7 are required to be filled by Input Service Distributer and Tax deductor respectively. Refunds Same as refund in existing tax structure, Refund under GST by Educational and Training institution may be availed in the following situations:- In case of excess payment In case of export of services In case of Finalization of Provisional Assessment. In case of pre deposit in case of Appeal. Further, Refund application shall be filled within 2 years from the relevant date.
The Goods and Services Tax (GST), the country’s biggest tax reform, is scheduled to be rolled out from July with the Parliament passing all the crucial laws on April 6. The main problem now is implementation, which politicians and experts say, will not be smooth as companies have to file as many as 37 forms in every state. While the compliance cost will increase, businessmen will have to brace for penalties, harassment and even jail term. Many smaller units will have to buy software and hire professionals to compile the transaction details to get tax refunds. For those having units at remote places, filing returns online will be a challenge in absence of internet connections. One of the main architects of the GST and former prime minister, Manmohan Singh, has warned that the new indirect tax regime could be a “game-changer” but fraught with “difficulties”. Congress leader Veerappa Moily has cautioned the government that the rushed GST rollout from July will make it a “technological nightmare” for businesses. Here are the 10 things that taxpayers have to look out for in the new GST regime: 1.Multiple tax forms Companies will have to go through a grueling exercise of filling up and filing multiple forms for central GST (CGST), the inter-state integrated GST every month. “The basic returns under GST could be 37 in a year for a single GSTIN—GSTR-1, GSTR-2 and GSTR-3—for each month, and one annual return. For a company with operations in 20 states, it means 740 annual returns, ” says Archit Gupta, founder and CEO of For an e-commerce company, it could even be as high as 432 returns in a year. 2.Can GSTN support a flood of data? GST Network is geared to accept up to three billion invoices a month from 8.5 million taxpayers from day one. The common portal ( acts as an interface between different stakeholders in the GST ecosystem, namely taxpayers, tax departments, banks, the Reserve Bank of India, external service providers, among others. The portal becomes the touch point for taxpayer registration, invoice upload, tax payment, getting input tax credit, maintaining the cash ledger and stock holding etc. This would mean that the network must have the capacity to handle massive amounts of data, and hence the fear of a breach. Given the experiences of online filing of income tax and VAT, experts doubt the new GSTN will be able to seamlessly match billions of vouchers, facilitate tax collection, provide refunds and check evasion. 3.Go digital without hard copies GST will herald not only a new tax but also a 100% digital system to file returns and payments., further raising questions about adaptation, especially in arear of low internet adoption. “All filings, communications and payments will be through a common portal. There will be a discontinuance of hard copy filings and a move towards digital India. It will be a Herculean task as a large number of people especially the small traders do not have access to electronic facility, ” says Priyajit Ghosh, a partner looking into indirect taxes at KPMG. 4.Data privacy Subramanian Swamy, a leader of the ruling Bharatiya Janata Party, has openly expressed reservation at the security and privacy of the GSTN, which will be 51% owned by private players. Opposition leaders—Congress’ Kapil Sibal and CPI’s D Raja—have expressed concerns about data privacy under a private company GSTN. Finance minister Arun Jaitley has assured lawmakers in Parliament that there will be IT firewalls and penal provisions for any leak of information. Given the rise in cyber crimes, can leak of information and technical glitches be ruled out? 5.Allegations of draconian provisions Some of the Parliamentarians raised objections to some of draconian provisions of arrest for fraud in the initial years as many new firms will be using the GSTN system for the first time and are bound to make genuine mistakes. Although Jaitley has assured that small businesses will not be covered by the harsh provisions, every offence of tax evasion will be compoundable. There will be no arrest for frauds up to Rs 2 crore. For offences between Rs 2 crore and Rs 5 crore, it is going to be bailable. For offences over Rs 5 crore, it is going to be non-bailable.
March 2, 2017 • No Comments Why is Technology the Epicentre of GST Implementation Share 262 Tweet Share 12 +1 2 SHARES 276 Technology-assisted compliance is not an entirely new concept in India. Way back in the 1990s, taxation departments used technology for tax administration. However, this was mainly as a backend mechanism. A major shift in behaviour occurred when online filing of returns was introduced. This was largely a result of different computer systems being integrated, thus enabling taxpayers to directly interact with the tax department. Under the current taxation system, data or information broadly flows in one direction to the Government, which we can describe as a B to G or Business to Government data flow. With the use of technology, the time and cost has reduced significantly while accuracy of compliance has been greatly enhanced. Technology for GST compliance – what is different this time? With technology already a driving force for compliance today, what then is the need to revisit issues that concern the right technology for GST implementation and compliance? Why will technology play a pivotal role in GST implementation and administration from both a government and business perspective? With GST, the two major goals that the government intends to achieve are: • Reduce tax evasion • Simplify compliance for taxpayers In the prevailing tax systems, there are several cases where the government has not been able to detect evasion and loss of tax revenues. As a result, it has become a challenge for the department concerned to track the input claims against the liability of the seller. There have also been numerous cases of duplication of claims on input tax, fraudulent claims, input tax claims that do not correspond with tax liability declared by the seller, or seller who has not furnished his tax liability. In order to overcome this, GST has introduced invoice matching of buyer and seller. It has been estimated that the taxpayer base under GST is around 8 million. With billions of invoices to be matched on a monthly basis, there is a critical need for a real time invoice matching capability, supported by robust IT infrastructure. There is no way invoice matching at this scale can be achieved manually. What is GSTN’s role in simplifying compliance for taxpayers? The GSTN is currently working on rolling out state-of-the art IT infrastructure that will introduce changes that are significantly different from the current system. Equipped with an open API (Application Program Interface), the GSTN server will seamlessly connect with third party applications used by taxpayers, thus providing an all-user interface, and convenience via desktops, mobiles, and tablets. This will assist taxpayers to automate their invoice matching from within their software rather than by logging onto the portal. This will save time, and drive simplicity of compliance procedures. GST will drive a lot of discipline in filing returns at regular intervals, and automation will help businesses achieve this with less pain. Use of technology will also enable efficient tax administration for registration, returns filing, data exchange, and effective investigation, monitoring, auditing and performance analysis with little or no human intervention. It will also provide several user-friendly features such as offline capabilities, alerting capabilities, mobile/tablet interface, and additional mechanisms to avoid duplicity of data. As this tax system is being implemented for the first time in India, businesses will encounter several challenges during the initial stages of implementation. However, once systems are streamlined, the two important objectives envisaged – curbing tax evasion, and increasing tax revenue and ease of compliance for taxpayers will be achieved. The success of this transformation will help our nation create history in the world of GST compliance. So what should businesses do now? The GST regime which begins on July 1, 2017, will ride on the strength of technology with seamless interface with the GSTN server. Businesses must automate their manual systems, and install software that is robust enough to interact with the GSTN system, and assist in immediate, accurate, and reliable compliance. Invoice matching is a very critical requirement of GST. Because of the clear timelines dictated by GST, compliance will no longer be a month-end or quarter-end activity. Therefore, invoice matching and other compliance related activities cannot be achieved using a manual or a low-tech system. Speed and accuracy are both critical. Businesses will have to start interacting frequently with the GSTN system. This will require a GSTN-enabled business application or accounting software so that the task ahead become seamless and efficient.
Assessment of Tax Liability in GST Assessment of tax means determination of the tax liability of a person. The tax liability of a person is the amount of tax to be paid by a person during a tax period. The types of assessment of tax under GST remain similar to those in the current regime. Broadly, there are 2 types of assessments – assessment by the taxable person himself/herself, i.e., self-assessment, and assessment by the tax authorities. Assessment by the tax authorities are of 4 types: Provisional assessment Scrutiny assessment Best judgement assessment Summary assessment Let us understand these in detail. Self-Assessment Every registered taxable person must assess the tax payable by himself/herself and furnish the relevant return for each tax period. Based on the type of taxable person, the returns to be furnished have been specified. This is explained in detail in our blog Type of Returns under GST For example: A registered regular dealer must furnish Form GSTR-3 on a monthly basis and Form GSTR-9 annually. This is the incidence where the tax payer is conducting self-assessment. Assessment by the Tax Authorities 1. Provisional Assessment If a taxable person is unable to determine the value of goods and/or services or determine the rate of tax applicable, the person can request an officer to allow payment of the tax on a provisional basis. The officer will pass an order allowing the person to pay the tax on a provisional basis. The rate of tax and the taxable value will be specified by the officer. The person has to execute a bond and surety or security, as the officer thinks is fit. The bond is binding on the person for payment of the difference between the amount of tax provisionally assessed and finally assessed. Within 6 months from the date of the provisional assessment order, the officer must pass the final assessment order. The person will be liable to pay interest on any additional tax payable under provisional assessment but not paid on the due date, i.e. 20th of the month. Interest will be liable from the 21st of the month till the date of actual payment, irrespective of whether the amount is paid before or after the final assessment order. If the person is eligible for a refund as per the final assessment order, interest will be paid on the refund amount. For example: A registered person manufactures a new product for which the HSN code and tax rate are not available. In this case, the person seeks a provisional assessment of the tax payable by him. 2. Scrutiny Assessment Under scrutiny assessment, an officer can examine the return and other information furnished by a person, to verify the correctness of the return. If any discrepancy is noticed, the officer will inform the person and seek his explanation. If the explanation is satisfactory, no further action will be taken. In case no satisfactory explanation is given within 30 days of being informed or if the person does not make corrections in the return after accepting the discrepancies, the officer will initiate appropriate action. For example: As part of the regular scrutiny assessment, an officer examines Form GSTR-3 filed by a registered person and has doubts regarding the transaction value and tax levied in certain transactions. In such a case, the officer will seek an explanation from the dealer. 3. Best Judgement Assessment Under best judgement assessment, an officer will assess the tax liability of a person to the best of his/her judgement. The circumstances for this are: a. Assessment of non-filers of returns– If a person fails to furnish a return, even after a notice is served to the person, an officer will assess the tax liability of the person to the best of his judgement. All relevant material which is available or which the officer has gathered will be taken into account. He will then issue an assessment order within 5 years from the due date of filing of the annual return for the year in which the tax return was not filed. If the person furnishes the return within 30 days from the assessment order, the assessment order will be withdrawn. For example: A regular dealer does not furnish Form GSTR-9 for a financial year, even after receiving a notice from the Tax department. In such a case, an officer will initiate best judgement assessment to assess the tax payable by the person. b. Assessment of unregistered persons– If a taxable person fails to obtain registration even though he/she is liable to do so, an officer will assess the tax liability of the person to the best of his judgement for the relevant tax periods, and issue an assessment order within 5 years from the due date of filing of the annual return for the year in which the tax was not paid. For example: During an inspection, an officer finds that a person has not registered under GST though his turnover exceeds the threshold limit. The officer will initiate a best judgement assessment and assess the tax liability of the person. 4.Summary Assessment In certain special cases, an officer may, on finding any evidence showing tax liability of a person which comes to his notice, with the permission of the Additional/Joint Commissioner, assess the tax liability of the person to protect the interest of revenue, and issue an assessment order if he has sufficient grounds to believe that any delay in doing so will adversely affect the interest of revenue. For example: On the basis of Form GSTR-3 filed by a registered regular dealer, an officer initiates summary assessment as he finds enough evidence to believe that a significant loss of revenue can be recovered from the person. It is important for a taxable person to be aware of the different types of assessment under GST and adhere to the compliance requirements. Self-assessment is most important for every registered person. It is important to furnish accurate information and pay tax due on a timely basis, as per the due dates laid down. Self-assessment done appropriately ensures that assessment is not initiated by the tax authorities. In a case where an assessment is initiated by the tax authorities, a dealer must ensure to furnish the information asked for by the time given. Businesses must make use of the facilities of compliance and technology to remain compliant under GST.