GST Return Filing

At last, we are all set to rollout Goods and Services Taxes (GST), considered as biggest tax reforms in the recent past. The implementation date for the same is July 01. Every transaction has to be reported from the seller to recipient of any single goods and services. An extensive IT system has been deployed by the Government to cope up with huge influx of data, called the GSTN (Goods and Service Tax Network) that will house all the information of sellers and buyers together, collaborate the details submitted and even maintain 3 registers for future reference and anytime reconciliation. A robust reporting structure has been put in place. Let’s understand the various types of GST returns, forms and the process of filing.

GSTR-1

The return filing of normal taxpayers starts with this form. The taxpayer records the outward supplies of goods and services. To be done by 10th of the succeeding month, this form has details such as GSTIN, Name, Annual Turnover, Filing Period, Taxable Outward, Tax Liability and Tax paid.

GSTR-2A

This return is available on the 11th of the succeeding month to recipients for validation. The validation can be done upto 15th of that particular month.

GSTR-2

This form is of all inward supplies of goods and services as approved by the recipient and auto populated with details of GSTR-2A. It has details such as, GSTIN, Name, Filing Period, Inward Supplies, Debit/Credit Notes, TDS/TCS Credits, Tax Liability and Tax paid. The final date is 15th of the succeeding month.

 GSTR-1A

The return shall be auto-populated after filing of GSTR-2 on the 15th of the succeeding month. The supplier shall have the choice to accept or reject the changes made by the recipient. Following such acceptance, the GSTR-1 shall be revised to such extent.

GSTR-3

This return is auto prepared by 20th of the succeeding month. It will have the details of all outward as well as inward supplies of goods and services as furnished in GSTR-1 and GSTR-2. After considering both the details, GSTN will determine the input tax credit availability or the amount of tax payable. It will have details, such as, GSTIN, Name, Filing Period, Total turnover, Taxable & Non-Taxable Turnover and Inter & Intra State Supplies/Receipts,

GSTR-9

This is the annual return, which the taxpayer has to file by 31st December of the upcoming financial year. It is nothing but the accumulation of all 12 monthly GSTR-3 of the taxpayer. It would also include the amount of tax paid during the year, including details of exports or imports.

Apart from the above, there are exclusive returns for composition tax payers, non-resident tax payers and e-commerce portals.

Any business, manufacturer, trader or service provider, has to file these mandatory returns. While, the automation is an attempt towards process simplification, it may also complicate matters for businesses without requisite resources.

LexHive Consultants help in computing payments and ensuring on-time payments & return filings.

Transition to Goods and Services Tax (GST)

The Goods and Services Tax (GST) is supposed to be the biggest reform in India’s indirect tax structure since the economy began to be opened up 25 years ago. It was first recommended in the year 2004 by Kelkar Task Force on implementation of Fiscal Responsibility and Budget Management.

Objectives of GST:

  • Subsume all indirect taxes at the centre and the state level
  • One-Country-One-Tax
  • Reduce the cascading effect of taxes on taxes
  • Increase productivity and transparency
  • Increase tax-GDP ratio
  • Reduce/Eliminate tax evasion and corruption

So, how GST differs from the current regimes and how it will work?

Currently, everyone in a business transaction (includes manufacturers, whole-sellers, retailers & purchaser) has to pay variety of taxes when they get engaged in a transaction of an item. But, once GST comes into effect, it is expected that all central and state level taxes and levies on all goods and services will be subsumed within an integrated tax having two components: a central GST and a state GST. The end-consumer will bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.

As mentioned by the Ministry of Finance, “GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.”

How is it important to the economy?

  • The GST regime seeks to subsume the all the taxes levied by the Central Government and the State Governments into a single one.
    • Central Taxes: Central Exercise, Service Tax, Central Surcharges, Central Cess.
    • State Taxes: VAT/Sales Tax, Entertainment Tax, Luxury Tax, State Taxes, Cess)
  • States and the Centre will have concurrent power to levy taxes. As of now, Centre mainly collects Service Tax, while the states tax the retailing process. With GST their roles will be extended.
    • Centre Government will levy Integrated GST (IGST) on inter-state supply of goods and services. On intra-state supply of goods and services, the Central Government will levy Central GST (CGST)
    • State Governments will levy State GST (SGST). Import of goods will be subject to basic customs duty and IGST.
  • Taxes will be on consumption and not on production.The final consumer will bear all the taxes, and this tax will have Centre’s as well as the States’ share in it.

 Getting ready for GST

In view of recent developments, it appears that the Government is set to meet the target of implementing the GST with effect from 1 April 2017. Introduction of GST will necessitate review and change of tax positions, supply chain, ERP system, business processes and accounting, among others. GST is a tax trigger that will lead to business transformation.

Hence, as we approach GST implementation timelines you need to be proactive to set in place appropriate processes to handle the change and be GST ready.

  • Understand key areas of impact in your business
  • Prepare the transition roadmap and align relevant teams
  • Change in business processes to align to the new tax regime
  • Continually track policy development regarding GST and update proposed scenarios
  • Identify any areas of adverse impact and prepare contingency measures
  • Identify issues and concerns needing representations to the authorities and develop a strategy for effective advocacy
  • Update of ERP
  • Training of all personnel on new processes

LexHive’s Roles

 Renegotiate the pricing with vendors, if needed

  • Alignment of all major contract terms and tax clauses with GST
  • Review existing contracts with vendors to analyze the impact
  • Assisting in maintenance of requisite statutory registers of supply and procurements, input credits
  • Timely filing of monthly and annual returns
  • Identifying impact on financials, working capital, credit chain, concessions, etc
  • Making requisite changes to ERP modules, MIS reports, etc
  • Training sessions for employees on the changed scenario, record keeping, integration & compliance

 LexHive Advantage

  • Our team comprises specialized & experienced professionals and advisors, including former government officials
  • We maintain a strong working relationship and have access to various government departments and agencies
  • An all-inclusive collection of service offerings to help ensure smooth transition across functions (tax, IT, supply chain, accounting)
  • With a diverse clientele, our in-depth experience cuts across multiple business segments including manufacturing, service and trading

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