These days, Goods and Services Tax (GST) is a topic for
discussion. It is a hot topic for the news rooms, the corporate
boardrooms, trade and industry etc; this reform has almost gobbled
up three parliamentary sessions. It is waiting to see the light of
day hoping that the tug of war between the government and the
In the meanwhile, the Joint Committee, constituted by the
Empowered Committee of State Finance Ministers, has made suitable
recommendations for certain processes under GST, such as:
Since GST era is expected to be conceptually different from
sales tax, service tax, excise duty etc; therefore, it is pertinent
to shed light on issues which an assessee would encounter during
the GST era.
Currently, levy of VAT/CST by states
is 'Origin Based' and payable at the place where the
movement of goods commences and under service tax, the place of
supply is destination based i.e. location of the service receiver.
As already known, GST will be 'Destination Based' i.e.
taxes will be paid where the service receiver/consumer of goods are
located. Accordingly, the tax on supply of goods or service is
required to be deposited in the state where the goods or services
The facility of centralized
registration, currently available to service tax and central excise
assesses, will be discontinued under GST thus, making it incumbent
for the assessee with offices/branches situated in different states
to follow the following:
obtain registration in places where
the goods / services are supplied
maintain separate books of accounts
for each such premises
control/maintainrecords of payment
and receipts (income and credit) for service rendered or supply of
The pain doesn't end here, as an
organization would be required to file the following returns
One annual return,
In case an assessee is registered in 6 states then the number of
returns to be filed are as follows:
No. of returns
In the reports on business processes
by the Joint Committee does not cover on the current Large Taxpayer
Unit structure or the setting up of MOSS (mini one stop shop) type
of facility as provided by European Union. An Indian tax payer
supplying goods or services in multiple states should be provided
option to obtain a centralized registered with single tax authority
as it is done in the current service tax / central excise
It is pertinent to understand that
the current structure of GST has a resonance to affect every part
of business in India with regards to cash flow, costing of capital,
pricing of products and services, financial reporting, tax
accounting, compliance processes, supply chain, procurements and
contracts and all technology currently enabling this ecosystem.
Furthermore, considerable efforts will have to be made by the
assessee to impart training to their personnel for effective
operation and better understanding under this new regime. Certain
processes namely GST registrations, tax credit transitions, return
reporting, other statutory compliances, managed/ shared services,
system changes in ERP, EI tools, other technology tools, compliance
with GSTN requirements and for audit, automation, tax credits,
payments and accounting, change assessment in accounting entries
(including revised chart of accounts, compliance with Indian
Accounting standards etc.) etc. are certain core which will require
upgradation under the GST regime.
The much anticipated GST regime seems to be a real pocket burner
as it seems that considerable cost would be incurred by the
assessee to effect a transition and to adapt to the compliances of
the new regime.
The content of this article is intended to provide a general
guide to the subject matter. Specialist professional advice should
be sought about your specific circumstances. The views expressed in
this article are solely of the authors of this article.
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