GST is less than a week away. ET brings a last minute
check-list by PwC of all the things that businesses need
to do.
GET REGISTERED FOR GST
Under GST laws, entities supplying taxable products and services need to be
registered in all the states from which these will be supplied. An entity
already registered in a state under any existing law should be migrated to
the GST regime. Unregistered entities will have to get
registered in the specific states from which supplies are made. The window for
this is likely to open from June 25 for a month or so.
GEAR UP IT SYSTEMS TO ISSUE INVOICES FROM DAY 1
IT systems will need to be readied, and all the requisite changes made, to
issue invoices from the first day of the GST regime. Invoice formats will have
to be amended as soon as possible. Moreover, according to GSTIN requirements,
customerrelated data as well as tax codes and conditions (used to compute tax
on every transaction) will need to be updated in IT systems and configured to
generate reports required for GST.
TRAIN YOUR TEAM AND STAKEHOLDERS
It is imperative that all employees and supply chain partners, such as vendors,
distributors and C&F agents, are trained well on amendments in the law. And
since the GST law envisages seamless passing of credit of taxes only
on suppliers’ compliance with its requirements, it is imperative that all
stakeholders are appropriately educated on compliance-related
requirements.
FINALISE YOUR TAX POSITIONS
Supply of goods or services will attract tax in the GST regime. Credit
provisions will also see changes. In addition, if a company is registered in
different states it will be treated as a distinct entity for levy of GST.
Therefore, considering the quantum of changes, each transaction undertaken by a
company will have to be identified separately, irrespective of whether GST will
be applicable for it or not, in order to determine the tax treatment of the
transaction. After the mandatory tax treatment is determined, the transaction
will need to be configured in the entity’s IT system.
REVISIT AND UPGRADE YOUR BUSINESS PROCESSES
From taxation being imposed on the manufacture or sale of goods and provision
of services under the present system, it will move to GST being levied on
supply of goods and services. In addition, there are various other procedural
amendments, such as self-invoicing in the case of purchases made from
unregistered vendors, reversal of credit in the case of non-payment of
consideration for goods, etc. Such amendments in the law will necessitate
significant changes in various business processes and it will be necessary for
entities to assess the impact of these and change the processes, wherever
required.
AMEND YOUR CONTRACTS WITH VENDORS AND CUSTOMERS
Under the existing indirect tax regime, a correlation between the location of
receipt of input services and for receipt of invoices for such services at any
location in India is not required. In the GST regime, since the credit pool for
every state will need to be maintained separately, it will be necessary to
ensure that an invoice for input services is received at the place where credit
of such services is eligible. This will need an analysis of procurements of
services and amendment of contracts with service providers, where required.
Similarly, contractual terms with customers will have to be reassessed and
revised, if needed.
DETERMINE YOUR PRODUCT PRICING EARLY
At present, the margins of supply chain partners such as distributors and
retailers are computed on the assumption that they are only liable to pay VAT
on their sale price. Going forward, supply chain partners will also be required
to pay GST on their sale price, and accordingly, their margins will need to be
recomputed due to the changes in tax rates and availability of credits. And in
addition to revised margins for supply chain partners, the impact on tax
credits and movement in the tax rate along with the anti-profiteering
provisions under GST will require companies to reset the prices of goods or
services supplied by them. Therefore, they will need to determine the overall
impact of the new taxation regime on their businesses before taking any
decisions on pricing.
CLAIM CREDIT FOR TAXES IN TIME
The GST law provides for carry-forward of accumulated tax credit as well as for
claiming credit of various taxes paid on stock in hand (which cannot be claimed
at present), subject to fulfilment of the prescribed conditions. Furthermore,
for carry forward of their VAT credit balance, taxpayers will have submit their
sales tax declaration forms or certificates in Form C, Form F, Form H, etc., as
applicable, wherever they have claimed exemption or a concessional rate of CST
on such sales. But relevant declaration forms or certificates have not been
submitted to the authorities till now. So there is an urgent need to accelerate
submission of these forms — sooner rather than later!