GST rollout: This is what we need for a seamless transition

Seamless transition into GST should require attention to the following:

Registrations: 

Obtaining registration under GST is critical for undertaking the ensuing compliances. Taxpayers should ensure successful migration from existing indirect tax registrations as also where applicable obtain fresh registrations. The window for obtaining fresh registrations has opened on 25 June 2017. The Government has set up a help desk portal to resolve the technical glitches faced viz. non acceptance of OTP at the time of registration, signing off on the application, etc.

In this connection, it is pertinent to note that a taxpayer needs to obtain registrations covering every place pf business. Further, job workers’ premises may also be required to be added as an additional premise in the registrations. 

In cases, where expenses are incurred for operations across the country, the input tax credit related to these expenses are allowed to be distributed. For this purposes, a separate Input Service Distributor registration needs to be obtained for establishments that incur such expenses. 

Sales:

The immediate focus would need to ensure ability to invoice the customer and charge appropriate taxes. To this end, the following is required to be collated:

Ascertaining the location from where billing needs to happen and obtaining registrations for the said locations;

Determining the place of supply for a given transaction;

In case of a supply to a registered person related obtain registration details;

Ascertain the relevant HSN for supply goods and/ or services;

Ascertain relevant applicable tax rates;

Apply the appropriate  tax (IGST in case of interstate supply and CCGST/ SGST/ UTGST in case of intra state supply)

Wherever ERP systems are being used by the tax payers, relevant masters related to customers/ products/ tax engine would need to be populated from a GST standpoint.

Transition:

Government has prescribed several regulations in relation to transition into GST regime. Primarily, tax payers engaged in manufacturing or sales or trading would be required to mandatorily ensure identifying opening stock of raw material and finished traded goods. This would ensure alignment with transition provisions to enable availment of relevant credits of taxes embedded in such opening stocks 

Taxpayers to also account for procurements done in the existing tax regime and collate eligible tax credits and report the same.  It is imperative that relevant invoices from vendors are received in a timely manner for enabling appropriate compliances to be carried out.

Procurements:

Tax payers need to ensure that vendors are registered. Procurements from unregistered vendors mandate additional compliances of payment of taxes on a reverse charge basis (input tax credit of such taxes so paid is available). Furnish the relevant registration numbers to vendors so as to enable them to charge appropriate taxes. This will also ensure enabling collation of credits.

Reassess existing vendor arrangements to avail benefits of the new tax regime.

Consumers:

Primarily the government has sought to either maintain or reduce the existing the tax burden on most goods. For a consumer, therefore, in most cases, there should not be material change. Hopefully, the reduction of cascading impact should flow though eventually and benefit the ultimate consumer.

Authored by 

Uday Pimprikar, Tax Partner, EY India

Nikita Nandwani, Senior Tax Professional, EY also contributed to the article