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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).

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10 5 2017

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 a PAN is mandatory for GST registration. Non-residents can apply for GST

registration by other documents as noti?ed by the appropriate authority.

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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 e-

commerce 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 Credit a/c

Output VAT a/c

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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.

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Input Sources – (8)

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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

transactions like purchase, sale, billing,

invoicing, claiming input tax credit and

comply with the provisions of the new GST

regime

its

?nancial

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

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. 

0% (No Tax)

5%

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.

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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,

Spectacles, Ayurvedic Medicines, diagnostic kits and

reagents, work contracts, Colouring & Picture

Books, Exercise & Note Books, Umbrella, Sewing

Machines, Ketchups & Sauces, Work Contracts etc. 

Bhujia

&

Namkeen,

12%

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, Ice-

Creams, 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. 

18%

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

Deodorants, Shaving Creams, Aerated Water,

Sunscreen, After Shave, Hair Shampoos,   ATM,

Automobiles and Two-Wheelers, Chewing Gums, Pan

Masalas etc. 

Rs.7,500,

Cinema,

28%

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 an increase in competition and surge in

pricing competitiveness, businesses will have

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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

Get Advice

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