GST is one of the most radical Tax reform in the Indian Taxation System after independence, with a concept of ‘1 Nation and 1 Tax Policy’ for the first time in India. GST enables a platform of uniformity and level playing field across the nation in terms of Tax Laws and Rate of Taxes. Additionally, there will be an unbroken chain of Input Credit of taxes paid on Goods and Services that will allow a reduction in the final tax burden on the end users.
The Central GST Act, 2017, Integrated GST Act, 2017, Union Territory GST Act, 2017 and GST (Compensation to States) Act, 2017 have already received the ascent of the President on 12-04-2017 and have been notified in the Official Gazatte of India (Link: https://blog.ritulpatwa.com/gst-bills-received-assent-of-the-president-12-04-2017/). Most of the states have also passed the respective State GST Act in their State Assemblies. There is a firm optimism in the government that GST will be made applicable in India w.e.f. 01-07-2017.
Since the tax is new, it is important for every business to prepare their accounts and tax teams to swiftly migrate from the Old Regime (Excise, VAT & Service Tax etc.) to GST Regime. This will require an in-depth understanding of the GST Law and Rules made there under, for which although a businessmen can depend on his Tax Advisor BUT for his control over this process of movement from the Old Regime to GST Regime, he needs to understand few basic steps and compliances that are required to be done by every business in the process of its migration to the GST Regime.
STEP 1: REGISTRATION ON THE GST PORTAL i.e. MIGRATION FROM VAT/ EXCISE/ SERVICE TAX TO GST PLATFORM (Link: https://blog.ritulpatwa.com/procedure-for-migration-transition-from-vat-to-gst/)
A) Obtain your Provisional ID and Password for Enrolment on the GST Portal from the Login Page of your State VAT Portal or the Central Excise/ Service Tax Login Portal;
B) Enroll on the GST Protal (www.gst.gov.in) by creating your unique username and new password using the Provisional ID and Password already received by the Tax payer;
C) After Login to the GST Portal with the new Username and Password – Fill in the Enrolment Application and provide the business details. Do not miss the mandatory details;
D) Verify the Auto Populated details from the State VAT System or Excise/ Service Tax System;
E) Attach the Mandatory Document of the GT Portal;
F) Sign the GST Enrolment Application electronically;
G) Once the Enrolment Application is reviewed by the GST System and found satisfactory, an Application Reference Number (ARN) will be issued. After receipt of ARN the status of Taxpayer will be changed from Provisional to Migrated till the appointed date i.e. the date of implementation of the GST Act;
H) On appointed date the status of your provisional registration will be changed to ‘Active’ and a provisional Registration Certificate will be issued.
I) On receiving the Active Status, a taxpayer will be able to use the services on the GST Portal like filling of tax returns, making tax payments, generation of forms etc.
STEP 2: GEARING THE I.T. SYSTEMS AND COMPILATION OF INFORMATION
GST places lot of reliance on compliance wherein Item-wise details of all supplies would need to be uploaded on the GSTN Portal. Further, there are requirements to capture and report additional nomenclature/ tax fields on Invoices in accounting and reports. This require a robust IT System which needs to be geared up for effective input of the data and timely generation of reports as per the requirements under the GST rules.
The GST Network that is developing the technology infrastructure for the implementation of GST has appointed several companies as GST Suvidha Providers (GSPs) to help the taxpayers and businesses in compliance. Few of the major companies include Tally, TCS, Deloitte, Mastek etc.
It is suggested that the Tax Payer/ Business should do the following activities for a hassle free adoption of the GST:-
A) Procure an IT Software from any of the appointed GSP for generation of the requisite information for timely compliance under GST;
B) Collect the GSTIN and other details of all your B2B customers, vendors & suppliers and feed this information in the software to prepare for effective compliance under GST. A sample list of information to be collected is enclosed as Annexure – 1;
C) Identify the HSN Code of all the products bought and sold and enter the same in the system before GST implementation to avoid last minute rush;
D) Ensure to share your GST ID with all your vendors/ suppliers and educate them to feed your details in their system to ensure that you are able to get the Input Credit from the appointed date itself;
E) Make necessary changes in the Invoice Format in accordance with requirements of the GST Law. List of Information required to be included in the Invoice are noted as Annexure-2;
F) Train your accounts team and acquaint them with the accounting and process related requirements under the GST. If required ask your Tax Consultant to take training session for your team;
STEP 3: REQUIREMENTS FOR MIGRATION OF EXISTING INPUT CREDIT OF TAX UNDER OLD REGIME OF EXCISE, VAT & SERVICE TAX
A) The requirement for claiming Input Tax Credit under the GST Law are as below:-
i) The taxpayer should have an original Invoice/ Debit Note issued by a registered supplier;
ii) He has received such Goods or Services or Both;
iii) The tax charged in respect of such supplies has been paid to the government (either by cash or by utilisation of eligible Input Credit);
iv) He has furnished the return under the Act.
B) GST Law allows claiming the Input Credit of Tax brought forward from the old regime as on the appointed date, as Input Credit under the GST Act. Following issues must be ensured for seamless migration of the Input Credit of the old regime to the GST:-
i) The taxpayer must get himself registered under the GST within one month of the appointed date to claim the benefit of the Input Credit of Taxes in respect of the inputs held in stock and inputs contained in semi-finished and finished goods held in stock as on the appointed date;
ii) The taxpayer must furnish proof of old return filled under the old regime. We strongly recommend that the taxpayer must make sure that all input taxes paid are included in his last return and by doing so, he will be claiming the credit of the same under the new regime.
ANNEXURE – 1
LIST OF INFORMATION TO BE COLLECTED FROM CUSTOMERS, VENDORS & SUPPLIERS
| S. No. | Information to be Collected | Remarks |
| 1 | Legal Name of the Entity | As given under the GST Registration |
| 2 | PAN of the Legal Entity | As per PAN Card |
| 3 | GSTIN (15 Digit Registration Number) | Please provide State wise GSTIN Details obtained along with a copy of the ARN Receipt (before the appointed date) and Provisional Registration Certificate (after the appointed date) |
| 4 | HSN/ SAC Code of Goods and Services | Please provdie details of HSN Code for Goods supplied and SAC Code for services provided to us so that the same can also be configured in the IT System |
ANNEXURE – 2
PARTICULARS TO BE FURNISHED IN AN INVOICE TO BE ISSUED UNDER GST
| S. No. | Information to be included in the Invoices under GST |
| a) | Name, address and GSTIN of the supplier; |
| b) | A consecutive serial number, in one or multiple series, containing alphabets or numerals or special characters hyphen or dash and slash symbolised as “-” and “/” respectively, and any combination thereof, unique for a financial year; |
| c) | Date of its issue; |
| d) | Name, address and GSTIN or UIN, if registered, of the recipient; |
| e) | Name and address of the recipient and the address of delivery, along with the name of State and its code, if such recipient is un-registered and where the value of taxable supply is fifty thousand rupees or more; [#] |
| f) | HSN code of goods or Accounting Code of services; |
| g) | Description of goods or services; |
| h) | Quantity in case of goods and unit or Unique Quantity Code thereof; |
| i) | Total value of supply of goods or services or both; |
| j) | Taxable value of supply of goods or services or both taking into account discount or abatement, if any; |
| k) | Rate of tax (central tax, State tax, integrated tax, Union territory tax or cess); |
| l) | Amount of tax charged in respect of taxable goods or services (central tax, State tax, integrated tax, Union territory tax or cess); |
| m) | Place of supply along with the name of State, in case of a supply in the course of inter-State trade or commerce; |
| n) | Address of delivery where the same is different from the place of supply; |
| o) | Whether the tax is payable on reverse charge basis; and |
| p) | Signature or digital signature of the supplier or his authorized representative: |
| ADDITIONAL INFORMATION FOR PREPERATION OF INVOICES UNDER GST | |
| 1 | ENDORSEMENT ON INVOICE IN CASE OF EXPORT |
| In case of exports of goods or services, the invoice shall carry an endorsement | |
“SUPPLY MEANT FOR EXPORT ON PAYMENT OF IGST” or “SUPPLY MEANT FOR EXPORT UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT OF IGST”
as the case may be, and shall, in lieu of the details specified in clause (e), contain the following details:
(i) name and address of the recipient;
(ii) address of delivery;
(iii) name of the country of destination; and
(iv) number and date of application for removal of goods for export:2CONDITIONS WHERE CONSOLIDATED TAX INVOICE FOR EACH DAY CAN BE ISSUED Provided also that a registered person may not issue a tax invoice in accordance with the provisions of clause (b) of sub-section (3) of section 31 subject to the following conditions, namely:-
(a) the recipient is not a registered person; and
(b) the recipient does not require such invoice, and shall issue a consolidated tax invoice for such supplies at the close of each day in respect of all such supplies.3RELAXATION IN USE OF HSN CODE IN THE INVOICE
(Link: https://blog.ritulpatwa.com/is-hsn-code-of-goods-mandatory-under-goods-services-tax-gst-in-india/)ExemptedFollowing dealers are expemted from use of HSN Code in the Invocies:-
a) Dealers with Turnover less than 1.50 Crores are not under mandatory requirement for use of even 2 Digit HSN Code;
b) Small Dealers under Composition Scheme are not required to mention the HSN Code in their Invoice.Limit on number of digits of HSN
a) Taxpayers whose turnover is above Rs. 1.5 crores but below Rs. 5 crores shall use 2-digit HSN code; and
b) the taxpayers whose turnover is Rs. 5 crores and above shall use 4-digit HSN code.