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2017

Top Five Challenges and Solutions of GST for AccountantsJuly 1, 2017 is a phenomenal date when India has made a history by implementing ‘One Nation, One Tax’ approach. Yes, GST (Goods and Services Tax) is indeed the biggest reform of our country that brings a few challenges and a lot of opportunities for our accountants. It is considered as a ‘Game Changer’ for Indian business as it will cause a long-lasting impact.

As we are passing through the transition phase from the traditional approach of many destination-based taxes to the one origin-based tax- GST regime, it is obvious that the accountants have to put extra efforts to grab the opportunities.

2017
Goods and Services Tax is a game changer tax reform in India. Though Government has tried to keep the tax structure simple, there are still many misconceptions prevailing amid consumers. Not just businesses or tax professionals, the common consumers must also keep them well informed about GST so that we can discourage the malpractices by traders post GST implementation.

Charging GST over and above MRP Value:

Some shop keepers are found charging GST over and above MRP of the products. This is especially true in rural areas where consumer awareness is lower regarding GST rules. Please make sure you only pay the MRP. If any shop keeper is found charging GST over and above MRP, refuse to pay the same. Also, inform about such incidences to National Consumer Forum on toll free number or online.

2017
  • After much preparation, debates, and anticipation; GST was rolled out in India on the midnight of 30th June, i.e. on July 1, 2017. The One Nation One Tax formula is being hailed as a positive measure for India by international agencies like Moody’s and the World Bank. However, as soon as and even before the new GST regime came into force, there has been a lot of skepticism around it. Messages and pictures are doing rounds of WhatsApp and Facebook, demonstrating what a huge menace GST is. So, are these messages about GST myths or do they hold some truth?
  • We are here to make everything crystal clear for you. Read on to know whether these popular myths about GST have some credibility to them or not.

1. Eating out is more expensive now

Not necessarily. Earlier there was a service tax of 6 % on the total bill amount (for AC restaurants) and a VAT which varied from one state to another. VAT rates differ from one state to another and therefore pre GST and post GST bill amounts may be higher or lower, depending on the earlier VAT rate in a particular state. Further, as the benefits of input tax credit start seeping in, eating out is likely to be cheaper in the long run, and not dearer.

2017
  • Among the various peculiar provisions in GST, there is a provision called RCM. According to this RCM provision, what will happen if purchases are made from an unregistered person?
  • The provision of reverse charge is already in service tax and the same provision is brought in GST. In service tax there are only specified persons who were required to pay tax on reverse charge basis but in GST all the persons are required to pay tax on the reverse charge on the purchase of goods and services.

What is meant by R.C.M?

  • R.C.M means reverse charge mechanism which means that tax on the purchase of goods or services has to be paid by the recipient. In simpler terms, R.C.M means paying the tax of the other person. Which transaction will be covered in RCM has been specified.

2017
  • In many respects, the Goods and Services Tax (GST) is less a tax reform than a business reform. GST implementation has brought a host of new changes to the taxation regime, but it will also impact the way business is normally conducted. The way goods are returned to a seller will have tax implication.
  • With GST coming into effect, businesses must take stock of how returns could be impacted, especially during the transition phase. The following questions provide a useful framework for understanding the changes to come:
    • What are the tax implications for goods sold prior to GST implementation date (let us call it ‘D-day’) but returned post D-day?
    • What are the tax implications for goods returned from registered and unregistered dealers?
    • What are the tax implications for returned goods that are exempt prior to D-day but taxable post D-day?

2017
  • Indian exporters are worried about the advent of GST and the liquidity crunch it could create for them. The crunch and issues connected to GST administration could adversely affect their overall competitiveness.
  • The Finance Ministry has recently assured exporters that 90 percent of taxes paid will be refunded within seven days. This is certainly good news for exporters. However, given that GST is a new system involving both the central government and states, the speed with which refunds will be issued remains a source of concern.
  • Exports are exempt from many domestic indirect taxes under the current tax regime. This will change once GST kicks in. GST is imposed every time value is added so manufacturing exporters will have to pay GST at various stages, beginning with raw materials. This will likely increase production costs and working capital requirements.

Financial Management