5 things to do after gst implementation your retail coach

10/5/2017

5 things to do after GST implementation | Your Retail Coach

5 Things to do After GST Implementation | YRC Jul 3, 2017

st From 1 July 2017, India has stepped into the much-awaited GST regime (country’s single largest tax reform since independence). GST will integrate country’s economy which is roughly worth $2 trillion and a vast customer base of 1.3 billion into one common market. GST is applicable to all businesses (supply of goods and services, trading, profession, vocation etc). It is time for businesses to gear themselves up to this new indirect tax environment. Major overhauls will be required in business processes, IT and ERP programs, sta training and marketing to incorporate the new taxation rules and regulations so that businesses are equipped to avail the bene ts of and comply with the GST regime which will eventually lead them to remain competitive and compatible with its environment.

GST Registration Under GST, a person or a business entity which is already registered in a state under any existing law will have to migrate to GST. Similarly, unregistered entities will have to get themselves registered under GST as per the given provisions.

Having aus PAN is mandatory for GST registration. Non-residents can apply for GST Message registration by other documents as noti ed by the appropriate authority. http://www.yourretailcoach.in/blog/5-things-to-do-after-gst-implementation/

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Separate GST registration shall be required for each state of operation and for each business vertical in a state. Persons and entities liable to get registered or migrated to GST are mentioned below.

Under GST, a person or a business entity which is already registered in a state under any existing law will have to migrate to GST 1. Every person with a turnover exceeding Rs.20 Lakhs (Rs.10 Lakhs for the North-Eastern States including Sikkim) in a nancial year.

2. Interstate supplier of goods and services 3. Casual Taxable Person 4. Non-Resident Taxable Person 5. Agents who act on behalf of supplier 6. Persons required to pay taxes under Reverse Charge Mechanism 7. Distributors or Input Service Distributor 8. E-Commerce operator and persons who supply through an ecommerce operator 9. Aggregator 10. Any

person

supplying

online

information

and

database

access/retrieval services from outside India to a person or entity in India (other than a registered taxable person) 11. Any person who is required to deduct TDS under GST. Note: Person includes Individuals, HUF, Company, Firm, Society, Trust etc. GST is not applicable to Agriculturists. Agriculture includes

oriculture, horticulture, sericulture,

cultivation of crops, grass or garden produce and does not include dairy farming, poultry farming, fruit gathering, plant rearing etc. GST registration is crucial because it is mandatory (as applicable) and will entitle businesses to avail various bene ts under GST. GST-registered businesses will be able to avail to input tax credit.

Timely registration will help businesses avoid attracting penalties from tax authorities. Persons and entities registering under GST will be assigned with a unique GSTIN (Goods and Services Tax Identi cation Number.

Input Sources – (1, 2, 3 & 4)

Changes in Accounting and TAX Treatment Under GST In the erstwhile taxation system, businesses had to maintain separate accounts for VAT, CST, Service Tax etc. Various accounts required to be maintained by businesses before GST is given below (8): Excise Payable a/c CENVAT Message usCredit a/c Output VAT a/c http://www.yourretailcoach.in/blog/5-things-to-do-after-gst-implementation/

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5 things to do after GST implementation | Your Retail Coach

Input VAT a/c Input Service Tax a/c Output Service Tax a/c CST a/c Post-GST, the existing indirect taxes will be subsumed and brought under GST. Some of the important accounts required to be maintained under GST regime are (8): Input CGST a/c Output CGST a/c Input SGST a/c Output SGST a/c Input IGST a/c Output IGST a/c Electronic Cash Ledger (Recordkeeping on the authorized GST Portal) The tax rate applicable will depend on the product/service and the type of GST (CGST, SGST and IGST) applicable will depend on the source and destination of supply of goods and services. Businesses can now o set their input tax (with purchases) with output tax (from supply/sales). For interstate transactions, IGST is applicable and for intra-state transactions, both CGST and SGST will be applicable.

Tax Collected (Output Tax Liability)

Taxes paid (Input Tax Credit) – Setting o order

Balance

CGST

CGST, then IGST

Tax payable

SGST

SGST, then IGST

Tax payable

IGST

IGST, CGST, SGST

Tax payable

For accounting purposes, businesses will have to follow GAAP under GST and books of accounts have to be maintained for ve years from the due date of ling the annual return of the particular year.

Message us Input Sources – (8) http://www.yourretailcoach.in/blog/5-things-to-do-after-gst-implementation/

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5 things to do after GST implementation | Your Retail Coach

Changes in Business Process – Finance and Accounts, IT and Logistics Under the erstwhile taxation system, indirect taxes were levied on the manufacture or the sale of goods and services. But with GST, the taxation will be based on the source and destination of the supply of goods and services. This will a ect and will require changes in various business processes like nance, IT and logistics. The new rules and regulations will have to be incorporated in the nance ERP so that businesses can process its nancial transactions like purchase, sale, billing, invoicing, claiming input tax credit and comply with the provisions of the new GST regime. Under GST, a normal taxpayer will have to submit three monthly returns and one annual return. Similarly, di erent persons registered under di erent provisions of GST (e.g. casual registration, composition scheme etc) will have to furnish di erent returns as per rule. There are altogether 11 main types of return forms (GSTR 1 to GSTR 11) for di erent persons or entities registered under GST for

ling di erent information to the tax authorities subject to the

given deadlines.

The new rules and regulations will have to be incorporated in the nance ERP so that businesses can process its nancial transactions like purchase, sale, billing, invoicing, claiming input tax credit and comply with the provisions of the new GST regime The aforesaid returns have to be

led online which makes it important for

businesses to incorporate the necessary changes in its IT infrastructure and information systems. It also becomes imperative for businesses to make sure that the returns are

led on time to avoid penalties. With the subsuming of Octroi,

businesses will also experience smoothness in its logistics and interstate supply of goods. Companies may also have to adjust and reposition their supply chain and logistics network to make the most out of the GST framework. SOPs can give a competitive edge to organizations in this transitional phase. Finance and Accounts SOPs can signi cantly help companies smoothly incorporate and execute the GST provisions applicable to their businesses. Because GST is new to everybody including the employees deputed in the

nance, accounts and purchase

department of a business enterprise, by integrating the working provisions and the compliance requirements of GST with the existing SOPs in the a ected departments, the concerned employees will be in a much better position to execute their GST-a ected duties and responsibilities like invoicing, ling returns, claiming input tax credits etc. This will help ensure that the regular

ow of

business operations is not a ected, deadlines are not missed and other compliances are duly ful lled. Hence, it is important for businesses to rede ne their SOPs especially for the accounts & purchase department.

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compliance requirements of GST with the existing SOPs in the a ected departments, the concerned employees will be in a much better position to execute their GST-a ected duties and responsibilities like invoicing, ling returns, claiming input tax credits Input Sources – (5)

HR: Sta

Training

The new set of rules, regulations and compliances will also bring changes in the business processes, operations and activities of an organization especially in the nance/accounts, purchase, logistics/supply chain and marketing. The resultant changes in the business processes will have a bearing on the job descriptions and job speci cations in the a ected departments of a business enterprise.

Employees, at all levels, have to be educated and trained on incorporating and executing the GST guidelines and provisions. Every business enterprise has to make sure that their accounts team is updated with GST rules applicable to the products and services.

The resultant changes in the business processes will have a bearing on the job descriptions and job speci cations in the a ected departments of a business enterprise A brief layout of the GST tax structure for di erent products and services is presented below.

Tax Rate

Goods and Services

0% (No Tax)

Salt, Milk, Eggs, Curd, Lassi, Unpacked Food grains.

Unpacked Paneer, Jaggery, Natural Honey, Fresh Fruits & Vegetables, Flour, Besan, Bread, Sindoor, Kajal (not sticks), Bindi, Bangles, Handloom, Judicial Papers, Printed Books, Cereal Grains, Hotels & Lodges with tari below Rs.1000 etc.

5%

Message us

Sugar, Tea, Edible Oils, Domestic LPG, PDS Kerosene, Cashew Nuts, Milk Food for Babies, Fabric, Spices, Coal, Life-Saving Drugs, Apparels < Rs.1,000, Footwear < Rs.500, Skimmed Milk Powder, Branded Paneer, Co ee, Spices, Frozen Vegetables, Medicines, Insulin, Postage & Revenue Stamps, Railways, Airlines, Small Restaurants etc.

http://www.yourretailcoach.in/blog/5-things-to-do-after-gst-implementation/

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12%

Mobile Phones, Business Class Air Tickets, Non-AC hotels, Butter, Ghee, Cheese, Almonds, Apparels > Rs.1000, Frozen Meat Products, Packaged Dry Fruits, ketchups, Fruit Juices, Bhujia & Namkeen, Spectacles, Ayurvedic Medicines, diagnostic kits and reagents, work contracts, Colouring & Picture Books, Exercise & Note Books, Umbrella, Sewing Machines, Ketchups & Sauces, Work Contracts etc.

18%

AC Hotels that serve liquor, Telecom Services, IT and Financial Services, Software, Trademark, Goodwill, Branded Garments, Footwear > Rs.500, Biscuits, Pastries, Mayonnaise, Jams, Steel Products, Aluminium Foil, Curry paste & Salad Dressings, Mineral Water, IceCreams, Cameras, Speakers, Monitors, Printer, CCTV, Swimming Pools, Hair Oil, Toothpaste, Soap, Pasta, Corn Flakes, Soups, Room Tari between Rs.2,500 to Rs.7,500, Restaurants inside 5 Star Hotels etc.

28%

Small Cars, Consumer Durables – AC, Fridge, Washing Machines, Vacuum Cleaners, Water Heater Shavers, Dish Washers. Five Star Hotels and Hotels with room tari s above Rs.7,500, Cinema, Deodorants, Shaving Creams, Aerated Water, Sunscreen, After Shave, Hair Shampoos, ATM, Automobiles and Two-Wheelers, Chewing Gums, Pan Masalas etc.

Input Sources – (6, 7)

Realignment of Marketing Strategies: Pricing, Competition and Arrangements With the removal of the cascading e ect of taxes, prices of products and services are expected to come down. GST might unleash competitive price wars as businesses under GST will get some space to play around with their pro t margins. Also, with a uniform taxation environment on goods and services across the country which bring tax-neutrality and with lesser compliance hassles, businesses across the country will seek to explore new markets in di erent states.

With an increase in competition and surge in pricing competitiveness, businesses will have to revisit their pricing and marketing strategies in the light of the new tax regime. Also, contracts and agreements with suppliers, distributors and clients may have to be renegotiated and modi ed to absorb the impact of GST on the parties involved in the value-chain process.

With Message us

an increase in competition and surge in pricing competitiveness, businesses will have

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5 things to do after GST implementation | Your Retail Coach

to revisit their pricing and marketing strategies in the light of the new tax regime While GST brings in a host of bene ts for the business community in the country, it also brings certain obligations on the part of the business organizations to get themselves registered with GST and comply with its provisions. With the new set of rules and regulations of taxation, businesses will have to address their tax positions and accounting procedures from the GST perspective. And with these changes in e ect, organizations will have to uplift their business processes (Finance, IT, Logistics etc) so that they remain in compliance with this new regulatory framework. The opening up of the market

oodgates with GST presents a sea of opportunities for companies and

business enterprises of all sizes to revisit their marketing strategies and ercely pursue business growth and expansion. The simpli ed and uniform tax mechanism is a motivating incentive for budding entrepreneurs with dream retail projects.

Author Bio Varun Shah Chief Finance O cer

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